Kotak Mahindra Bank July-September Profit Dips Marginally as Provisions Rise; Asset Quality Improves

Kotak Mahindra Bank Ltd.’s net profit for the September quarter fell slightly as higher interest income helped cushion the impact of a sharp increase in provisions, which rose for the tenth straight quarter.

The private lender reported a net profit of ₹32.53 billion for July–September, down 2.7% on year and 0.9% on quarter. Total income rose 2.1% on year to ₹162.39 billion, supported by a 3.3% increase in interest income to ₹136.49 billion. Other income fell 3.5% on year to ₹25.89 billion.

Net interest income grew 4% on year to ₹73.11 billion, while total expenses rose 1.6% to ₹109.70 billion. Provisions were up 44% on year at ₹9.47 billion but fell 22% sequentially.

Asset quality improved during the quarter. The gross non-performing asset ratio declined to 1.39% as of September 30 from 1.48% in June and 1.49% a year earlier. The net NPA ratio fell to 0.32% from 0.34% in June and 0.43% a year ago.

Loan growth remained healthy, with net advances rising 16% on year to ₹4.63 trillion. Consumer loans grew 16% to ₹2.26 trillion, commercial advances increased 5% to ₹979.62 billion, and wholesale advances rose 17% to ₹1.46 trillion. The share of unsecured retail loans fell to 9.2% from 11.3% a year earlier.

Deposits were up 14% on year at ₹5.11 trillion. Current account deposits rose 14% to ₹702.20 billion, though the CASA ratio slipped to 42.3% from 43.6% a year ago. The bank’s cost of funds eased to 4.70% from 5.15%.

Net interest margin narrowed to 4.54% in the September quarter from 4.65% in the previous quarter and 4.91% a year ago, mainly due to recent repo rate cuts by the Reserve Bank of India. The Basel-III capital adequacy ratio stood at 22.05% as of Sept. 30.

For April-September, the bank’s net profit fell 32% on year to ₹65.35 billion, while revenue from operations rose 5% to ₹331.55 billion.