Kotak Mahindra Bank Net Falls In April-June As Provisions Spike

Kotak Mahindra Bank reported a sharp 48% drop in net profit on year for April–June to ₹32.82 billion, hit by a near-doubling in provisions and the slowest income growth in three years. On a sequential basis, net profit was down 7.3%.

Provisions surged to ₹12.08 billion from ₹5.78 billion a year ago and rose nearly 33% from the previous quarter. The bank's total income for the June quarter was ₹169.17 billion, up just 7.9% on year and 1.2% sequentially. Interest income rose 8.6% to ₹138.37 billion, while net interest income rose 6% to ₹72.60 billion.

Asset quality weakened. Gross NPA ratio climbed to 1.48% from 1.42% in March, and net NPA rose to 0.34% from 0.31%. The bank’s provision coverage ratio stood at 77%, slightly lower than 78% a quarter ago. Annualised credit cost jumped to 0.93%, from 0.64% in the previous quarter and 0.55% a year earlier.

Fresh slippages rose 33.4% on year to ₹18.12 billion, while upgrades and recoveries fell 6% to ₹5.49 billion. The bank wrote off ₹7.59 billion in the quarter, higher than ₹5.7 billion a year ago. Net interest margin for April–June moderated to 4.65% from 4.97% a quarter earlier.

Advances grew nearly 14% on year to ₹4.45 trillion as of June end, while deposits rose 13% to ₹4.92 trillion. The credit-to-deposit ratio was 86.7%, compared with 85.5% at the end of March. Within advances, consumer loans rose 16%, commercial loans 5%, and corporate loans 10%. Retail micro-credit fell 43% on year and 12% sequentially to ₹58.82 billion.

Unsecured retail loans as a share of net advances dropped to 9.7% from 10.5% in the previous quarter. CASA deposits declined to ₹2.10 trillion from ₹2.14 trillion in March. The CASA ratio fell to 40.9% from 43.0% in the previous quarter and 43.4% a year ago. Cost of funds declined to 5.01% from 5.10% a year ago.

Operating expenses rose 6% to ₹47.75 billion. Employee costs grew 10% to ₹20.65 billion, while other operating expenses rose 2% to ₹27.10 billion.