Kotak Mahindra Bank Q3 Review- AIF Provisions, Treasury Loss Contribute To Slight Earnings Miss: Motilal Oswal

Motilal Oswal Report

Kotak Mahindra Bank Ltd. reported standalone profit after tax growth of 7.6% YoY to Rs 30 billion (11% miss) due to alternative investment fund provisions (Rs 1.9 billion) and treasury loss.

Consolidated profit after tax stood at ~Rs 42.7 billion (7% YoY growth).

Net interest income grew 16% YoY to Rs 65.5 billion (inline; up 4.1% QoQ). Net interest margins stood stable QoQ at 5.22%. Opex grew 14% YoY to Rs 42.8 billion, thereby, resulting in a 19% YoY growth in pre-provision operating profit at Rs 45.7 billion (5% miss).

Advances grew 16% YoY/3% QoQ to Rs 3.6 trillion, while deposits grew 19% YoY/ 2% QoQ, led by term deposits. Current account and savings account mix moderated 60 bp QoQ to 47.7%.

Fresh slippages declined 10% QoQ to Rs 11.7 billion. Gross non-performing asset ratio stood largely stable at 1.7%, while net NPA improved 3 bp QoQ to 0.34%. Provision coverage ratio improved 150p QoQ to 80.6%.

We cut our FY24/FY25 PAT estimates by 3.2%/2.7%. We estimate return on asset/return on equity at 2.4%/14.4% by FY25E.

We maintain our 'Neutral' stance on the stock with a target price of Rs 2,000.

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