Kotak Mahindra Bank Share Price Falls As Provisions Rise In Q2 Amid NPA Uptick

Shares of Kotak Mahindra Bank Ltd. plunged on Monday as the lender was hit with a sharp rise in provisions and a deterioration in asset quality in the second quarter of the current financial year.

Net interest income or core income, rose 11% year-on-year for the bank and stood at Rs 7,020 crore. Provisions for the quarter stood at Rs 660 crore, up 80% year-on-year.

The private sector bank's asset quality deteriorated, with the gross non-performing asset ratio widening to 1.49% as of Sept. 30, compared to 1.39% in the previous quarter.

Fresh slippages rose to Rs 1,875 crore from Rs 1,358 crore a quarter ago and Rs 1,314 a year ago. Recoveries and upgrades were Rs 681 crore, lower than Rs 942 crore a year ago but higher than Rs 586 crore a quarter ago.

Last week, Kotak Mahindra Bank entered into an agreement to acquire Standard Chartered Bank's personal loan book in India for Rs 4,100 crore. The country's fourth-largest private lender aims to strengthen its position in the retail credit market.

The transaction is expected to be completed within three months, subject to regulatory approvals and customary closing conditions. Upon completion, Kotak Mahindra Bank will acquire the outstanding loan book.

Kotak Mahindra Bank's share price fell as much as 4.13% during the day to Rs 1,793.8 apiece on the NSE. It was trading 3.87% higher at Rs 1,798.5 apiece, compared to a 0.18% advance in the benchmark Nifty 50 as of 09:38 a.m.

The stock has risen 3.2% during the last 12 months and has declined by 6% on a year-to-date basis. Total traded volume so far in the day stood at 4.4 times its 30-day average. The relative strength index was at 40.

Twenty-five of the 43 analysts tracking the company have a 'buy' rating on the stock, 13 suggest a 'hold' and five have a 'sell', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential upside of 10.5%.