Kotak Bank Net Profit Falls 48% In June Quarter On High Provisions, Weak Income

Kotak Mahindra Bank Ltd., the country’s fourth-largest private sector lender, reported a sharp 48.0% on-year fall in net profit for April–June to ₹32,820.0 million as provisions nearly doubled and total income growth slowed to a 12-quarter low.

The bank's net profit declined over 7.0% sequentially and was marginally below analysts' estimate of ₹34,640.0 million. Provisions for the quarter surged to ₹12,080.0 million from ₹5,780.0 million a year ago and were up 32.8% from the March quarter.

Fresh slippages in the quarter rose 33.4% on year to ₹18,120.0 million, while recoveries and upgradations declined 6.0% to ₹5,490.0 million. Loans worth ₹7,590.0 million were written off during the quarter, up from ₹5,700.0 million a year ago. The provision coverage ratio stood at 77.0%, down from 78.0% in the previous quarter.

Total income for the quarter rose 7.9% on year to ₹169,170.0 million, up just 1.2% sequentially. Interest income grew 8.6% on year to ₹138,370.0 million, while net interest income rose 6.0% to ₹72,600.0 million.

Asset quality worsened, with gross non-performing assets rising to 1.48% from 1.42% in March and 1.39% a year ago. Net NPAs rose to 0.34% from 0.31% in the previous quarter. The annualised credit cost surged to 0.93% from 0.55% a year ago and 0.64% in the previous quarter.

Due to limited growth in net interest income, net interest margin for the quarter dropped to 4.65% from 4.97% in the March quarter. The bank’s Basel-III capital adequacy ratio stood at 23.7%, up from 22.25% at the end of March.

Advance growth outpaced deposit growth during the quarter. Advances rose nearly 14.0% on year to ₹4.45 trillion, while deposits were up 13.0% to ₹4.92 trillion. The credit-to-deposit ratio stood at 86.7%, higher than 85.5% in March but lower than 87.2% a year ago.

Within advances, consumer loans rose 16.0% on year to ₹2.16 trillion, commercial loans increased 5.0% to ₹973,620.0 million, and corporate loans were up 10.0% at ₹1.03 trillion. Retail micro-credit dropped 43.0% on year and 12.0% on quarter to ₹58,820.0 million. Unsecured retail advances accounted for 9.7% of total loans, down from 10.5% in March and 11.6% in June 2024.

Current and savings account (CASA) deposits declined to ₹2.10 trillion as of June 30 from ₹2.14 trillion in March. The CASA ratio fell to 40.9% from 43.0% at the end of March and 43.4% a year ago. The cost of funds eased to 5.01% from 5.10% a year ago.

Operating expenses rose 6.0% on year to ₹47,750.0 million. Employee costs increased 10.0% to ₹20,650.0 million, while other expenses rose 2.0% to ₹27,100.0 million.