Kotak Mahindra Bank Q3 Results Review — Post Long-Term Time Correction, Upgrade To 'Buy': Yes Securities

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Yes Securities Report

Asset Quality – Kotak Mahindra Bank Ltd.'s gross slippages declined on sequential basis, with management making reasonably comforting comments in the context of the environment:

Gross NPA additions amounted to Rs 16.57 billion for Q3 FY25, translating to an annualized slippage ratio of 1.6% for the quarter. Gross NPA additions had amounted to Rs 18.75 billion during Q2 FY25. In unsecured small ticket lending, personal loan slippages have declined on sequential basis, whereas credit card slippages have remained similar and microfinance slippages have risen.

The rise in microfinance slippages have been more than offset by the decline in secured retail loan slippages. Retail microfinance is a small book of about Rs 80 billion in an overall book of about Rs 4000 billion and hence, cannot move the needle materially.

Provisions were Rs 7.94 billion, up by 20.2% QoQ and 37.1% YoY, translating to calculated annualised credit cost of 78 bps. Annualised credit cost based on specific provisions alone was 68 bps, up by 3 bps QoQ.

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