Private sector lender Kotak Mahindra Bank saw its third quarter net profit rise on higher core income and an improved net interest margin.
The bank's net profit for the October-December quarter stood at Rs 2,791 crore, up 31% year-on-year, according to exchange filings. Analysts polled by Bloomberg estimated a Rs 2,611-crore net profit for the three months.
Net interest income, or core income, for the bank rose 30.4% from a year ago to Rs 5,654 crore. Other income, too, rose 54% year-on-year to Rs 2,099 crore.
Gross non-performing asset ratio for the bank fell 18 basis points sequentially to 1.90%. Similarly, net NPA improved to 0.43% as of December 31, compared with 0.55% as of September 30.
The bank's net interest margin also grew to 5.47% in the quarter as compared with 4.62% a year earlier. There is room for the NIM to even further go up a little bit, Jaimin Bhatt, chief financial officer at Kotak Mahindra Bank, said during the bank's Q3 earnings conference call.
"Some of the NIM rise is the capability to pass on the rate hikes," Dipak Gupta, joint managing director at Kotak Mahindra Bank, said during the call. While the NIM may rise a little more in the near future, it may also soften as borrowing costs catch up, he said.
Kotak Mahindra Bank's total advances jumped 22.8% year-on-year in the the quarter to Rs 3.1 lakh crore. The bank's largest lending segment—home loans and loans against property—grew by 29% year-on-year. Credit cards, on the other hand, registered a growth of 85% in the same time period.
The bank's deposits grew 12.8% to Rs 3.4 lakh crore.
The bank's current account-savings account or CASA ratio declined to 53.3% from 59.9% in the preceding quarter. While the bank's current account base grew 11.3% year-on-year, its floating and fixed rate savings accounts fell 33% and 2.5%, respectively.
As interest rates move up, the bulkier deposits move away from saving accounts to term deposits but the more granular deposits keep growing at a stead pace, Gupta said.
The bank's operating expenses for the quarter jumped 12% year-on-year to Rs 3,486 crore. Provisions for the quarter rose 8% sequentially to Rs 148 crore. In the third quarter of FY22, Kotak Mahindra Bank had written back Rs 131.7 crore worth of provisions.
"At this stage, all you have to be concerned about is going overboard," Gupta said.
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