Kotak Bank's Q4 net profit jumps 25% to Rs 5,302 cr; NIMs drop

Kotak Mahindra Bank's Q4 net profit rose 25% to ₹5,302 cr, driven by loan growth. However, core income growth was limited due to narrower interest margins. Net interest income increased by only 13%, while other income grew by 36%. Loan growth was seen across all segments. The bank plans to increase its credit-to-deposit ratio. Share of unsecured retail advances increased to 11.8%. Asset quality improved with gross NPA ratio falling to 1.39%. The bank's subsidiaries showed mixed results, with Kotak Securities net profit doubling while others declined.

Kotak Mahindra Bank on Saturday reported a 25 per cent growth in its March quarter net profit at Rs 5,302 crore, limited by a drop in the core income due to narrow interest margins.

On a standalone basis, the city-headquartered lender's Q4 net profit grew 18 per cent to Rs 4,133 crore. The FY24 consolidated net profit grew 22 per cent to Rs 18,213 crore.

For the reporting quarter, its core net interest income increased by only 13 per cent to Rs 6,909 crore on the back of a 20 per cent loan growth and a narrowing of the net interest margin to 5.28 per cent.

Its group chief financial officer Devang Gheewalla said the overall NIM in the year-ago period was a peak of 5.78 per cent, and the same has come down this year as the cost of funds has risen, resulting in the lower core income.

The other income rose to Rs 2,979 crore from the 2,186 crore in the year-ago period on the back of handsome growth in the core fees and services income.

Its overall deposits grew by over 23 per cent in FY24, but the credit-to-deposit ratio declined to 83 per cent. Gheewala said the bank is aiming to increase the credit deposit ratio to an average of 87-88 per cent.

The loan growth was driven across all streams, with consumer growing at 20 per cent, corporate banking at 21 per cent, small businesses at 18 per cent and commercial at 20 per cent.

The share of unsecured retail advances, where the regulator has expressed concerns, rose to 11.8 per cent of the total book from 10 per cent in the year-ago period, and Gheewala said the plan is to continue growing the book and take its contribution to the mid-teens.

It wrote off Rs 1,455 crore of unsecured loans, which were fully provided for in the past.

The overall provisioning was reduced to Rs 264 crore from the Rs 579 crore in the year-ago period, helped by a Rs 157 crore write-back on the money set aside for alternative investment fund investments and Rs 200 crore benefit on a favourable taxation order.

On the asset quality front, the fresh slippages surged to Rs 1,305 crore during the reporting quarter from 823 crore in the year-ago period, but the gross non-performing assets ratio improved to 1.39 per cent from the 1.78 per cent in the year-ago period, primarily on the back of recoveries and upgrades of Rs 772 crore during the quarter.

Its new chief executive and managing director Ashok Vaswani said the outlook, exposure, expectation and affluence of customers have changed dramatically, and the bank has decided to align its business with the evolving consumer needs as a strategy for the future.

However, at present, the top priority of the lender is to come out of the embargo put by the RBI for laxities in technological architecture, he said.

Its capital adequacy ratio stood at 20.5 per cent as of March 31, 2024, with the core tier-I buffer at 19.2 per cent.

Among the subsidiaries, Kotak Securities net more than doubled to Rs 378 crore, auto loans-focused non-bank lender Kotak Prime reported a flat number at Rs 223 crore, the life insurance arm had a decline at Rs 109 crore, while the asset management arm also showed a decline to Rs 150 crore.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)