 "Kotak Mahindra Bank")
Kotak Mahindra Bank, a private sector lender, reported a 6.76 per cent increase in its consolidated net profit to Rs 4,265 crore for the quarter ending December 31, 2023. This compares to Rs 3,995 crore reported in the same period of the previous year.
On a standalone basis, representing its banking operations, the bank's net profit for the reported period was up 7.62 per cent to Rs 3,005 crore. This increase was attributed to a sharp rise in provisions.
Year-on-year (Y-o-Y), provisions and contingencies surged by 288.6 per cent to Rs 579 crore. This rise was mainly due to a Rs 190 crore provision for Alternate Investment Funds, mandated by the Reserve Bank of India (RBI) in its circular dated December 19, 2023.
Jaimin Bhatt, group president and chief financial officer at Kotak Mahindra Bank, said, “This quarter, we faced two significant challenges in the bank’s standalone operations. The first was the Rs 190 crore impact due to provisioning for AIF investments. The second challenge was related to the trading book, where we incurred a loss of Rs 168 crore in our fixed income book, net of OIS, during this quarter.”
The bank's net interest income (NII) increased by nearly 16 per cent to Rs 6,554 crore, while other income rose by nearly 18 per cent to Rs 2,297 crore.
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The Net Interest Margin (NIM) for the third quarter of financial year 24 was 5.22 per cent.
“Advances, including IBPC and BRDS, grew 19 per cent year-on-year to Rs 3,72,464 crore as of December 31, 2023, from Rs 3,13,154 crore as of the same date in the previous year,” the bank stated.
On the liabilities side, term deposits saw a year-on-year increase of 43 per cent to Rs 2.16 trillion. The share of current and savings account deposits decreased to 47.7 per cent from 48.3 per cent in the previous quarter and 53.3 per cent in the same period last year. The bank's presentation referred to deposits as a 'challenge'.
Shanti Ekambaram, wholetime director of the bank, commented on the shift in customer preferences due to market interest rates. "Customers are moving towards term deposits. We are concentrating on growing overall deposits. Despite challenges, our Casa ratio remains the highest in the industry. We have seen growth in our term deposits, and our current and savings account deposits continue to expand. However, tight system liquidity and overnight rates trading above the repo rate pose additional challenges."
As of December 31, 2023, the Gross Non-Performing Assets (GNPA) were 1.73 per cent and the Net Non-Performing Assets (NNPA) were 0.34 per cent. This represents a decrease of 17 basis points and 9 basis points respectively, compared to the same date in the previous year. Sequentially, both gross and net NPA ratios declined by 1 basis point and 3 basis points, respectively. The provision coverage ratio was 80.6 per cent.
KVS Manian, wholetime director of the bank, noted that the slippages to NPAs predominantly came from the retail businesses, particularly the unsecured retail segments.
In his first media interaction, Ashok Vaswani who took charge as MD & CEO of the bank earlier this month, said the digital stack that India has built and has transformed the country, offers a significant opportunity for everyone including the Kotak Mahindra Bank.
“Kotak is a very strong bank and has a very strong reputation, it is well capitalised and an incredible platform offering the full array of financial services products and services. As I see it, the challenge of the story from here on is how we scale,” Vaswani said.
The Capital Adequacy Ratio of the Bank, as per Basel III standards, was 21.2 per cent and the Common Equity Tier 1 (CET I) ratio was 20.1 per cent as of December 31, 2023. These figures include unaudited profits.
(Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd)
(Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd)
