Kotak Mahindra Bank Q3 Results: Profit Rises 7.6% On Higher Other Income
Net interest income, or core income, for the bank rose 16% from last year to Rs 6,554 crore in the quarter.
Kotak Mahindra Bank Ltd.'s third-quarter profit rose but fell short of analysts' estimates.
The private sector bank's standalone net profit rose 7.6% year-on-year to Rs 3,005.01 crore in the quarter ended December, according to an exchange filing on Saturday. Analysts polled by Bloomberg estimated a profit of Rs 3,163.3 crore.
Kotak Mahindra Bank Q3 Results Highlights (Standalone)
Net profit up 7.6% to Rs 3,005 crore (YoY)
Net interest income up 15.9% to Rs 6,554 crore. (YoY)
Gross NPA: 1.73% vs 1.72% (QoQ)
Net NPA: 0.34% vs 0.37% (QoQ)
Net interest income, or core income, for the bank rose 16% from last year to Rs 6,554 crore in the quarter. Other income rose 17.8% year-on-year to Rs 2,297.02 crore.
Asset quality for the lender stayed flat, with the gross non-performing asset ratio rising 1 basis point sequentially to 1.73% as of Dec. 31. The net NPA ratio improved by 3 bps quarter-on-quarter to 0.34%.
The net interest margin stayed flat at 5.22% quarter-on-quarter.
The NIM going up is a challenge at this point, according to Group Chief Financial Officer Jaimin Bhatt. "Getting deposits is a challenge, and so the cost of funds will also go up... No guidance on NIM as it is a moving field," he said during the Q3 FY24 media briefing.
Provisions for the quarter rose threefold from a year ago to Rs 579.14 crore. Here, the bank explained that it provided Rs 190 crore against the alternative investment fund and Rs 65 crore against security receipts.
The bank would make provisions on AIF exposure if stressed asset acquisition business makes sense, Bhatt said.
The bank has additional exposure to AIFs, and there was no involvement in the evergreening of loans, he said. "We are waiting for some clarification from RBI on the AIF circular. As a strategy, we are looking at it as an accounting provision."
Credit cost for the bank stood at 40 bps annualised in the third quarter of FY24, down from 47 bps annualised in the quarter earlier.
The lender's advances increased 19% year-on-year to Rs 3,72,464 crore in the quarter ended December. Unsecured retail advances, including retail microfinance, as a percentage of net advances stood at 11.6%, compared to 9.3% in the year-ago period.
The bank's unsecured portfolio currently stands at 11.6% of overall net advances, according to Bhatt.
"We are comfortable growing here," he said. "We don't have any intent to put breaks on it."
The retail microfinance portfolio saw maximum growth of 59% year-on-year to Rs 8,510 crore. This was followed by a growth of 52% to Rs 13,882 crore in credit cards.
On growth in credit cards, 95% of the lender's business comes from its own customers, said Shanti Ekambaram, whole-time director of Kotak Mahindra Bank. It continues to be an area of growth.
Personal, business and consumer durable loans grew 33% to Rs 19,310 crore.
Tractor finance grew 17% year-on-year to Rs 15,156 and 5% quarter-on-quarter. In the previous quarter, the bank cited some degree of caution in this portfolio but clarified that there was nothing alarming.
The CASA ratio for the lender stood at 47.7% for the quarter.
The average current account deposits rose to Rs 1,23,227 crore, up 4% year-on-year. The average term deposit was up 43% year-on-year to Rs 2,16,344 crore.
The bank launched ActivMoney in Q1 FY24, and the TD sweep balance grew 13% QoQ to Rs 41,784 crore.
On deposits, Ekambaram said that the bank's focus is on granular deposits through ActivMoney, term deposits and CA and SA.
The bank is also looking at long-term sources of funding, she said.
Kotak Mahindra Bank has also appointed Ashok Vaswani as the new managing director and chief executive officer, with effect from Jan. 1, 2024.
"One thing that stood out for me is the way India built on its digital stack. This continues to be a very significant opportunity and change vision, including for us at Kotak," Vaswani said in his first media address.
The bank also has Uday Kotak as a non-executive director on the board, according to Bhatt.
"Mr. Kotak joined the board as a non-executive director immediately after he stepped down as the MD and CEO," he said.
