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Systematix Research Report
Kotak Mahindra Bank Ltd. reported Q4 FY24 PAT of Rs 41.3 billion (+38% QoQ, 18% YoY) which was higher than estimates due to-
marginally improved net interest margins (3 bps benefit from interest on IT refund),
higher other income on reversal of mark-to-market losses and higher fee income,
lower provisions due to reversal of ~80% AIF provision done in previous quarter and
lower taxes from tax credits of Rs 2 billlion (5% of total tax).
Other key highlights were:
Advances growth of 4.6% QoQ, 18% YoY was mainly led by 6-7% QoQ growth in Commercial banking and SME. Personal loan/business loan/consumer durables and credit cards growth was soft at 4% and was below bank's average growth.
Deposit growth (9% QoQ, 24% YoY) was led by term deposit growth of 14.5% QoQ. CASA ratio declined to 45.5% (-223 bps QoQ) as compared to peers witnessing an increase QoQ.
Credit-deposit ratio reduced to 83.8% (-423 bps QoQ) and the bank expects it to be in the range of 86-87%.
Reported Q4 FY24 net interest margin increased to 5.3% (+6 bps QoQ) with 3 bps benefit from interest on IT refund.
Other income increased by 30% QoQ due to reversal of MTM losses on security receipts classified as NPI and seasonally higher distribution and syndication income which also benefitted from few large deals in infrastructure, real estate and NBFC financing space.
Opex is likely to increase in FY25 on the back of regulatory curbs and the bank guided for Rs 3.5- 4.5 billion of impact to PBT which reflects the net impact of curb on business operations related spends coupled with higher tech spends for strengthening core banking resilience amongst others.
GNPA declined to 1.4% (-34bps QoQ) mainly due to higher write-offs in retail unsecured loans which were fully provided, mainly done to align with industry practice of writing off 180 dpd loans.
Basis RBI circular on 27-March 2024, the bank released AIF provision of Rs 1.57 billion (~80% of the provision made in Q3 FY24).
RoA was 2.97% (2.5% ex Interest on IT refund, AIF provision reversal and tax credits).
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