Rise in net interest income lifted Kotak Mahindra Bank Ltd.'s standalone net profit by just 4.8% year-on-year to Rs 3,344 crore, meeting the consensus estimate of Rs 3,424 crore of analysts tracked by Bloomberg. The profit rise was limited due to a sharp rise in provisions by the bank and deterioration in asset quality.
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 assets ratio widening to 1.49% as of Sept. 30, compared to 1.39% in the previous quarter, but was lower than 1.72% a year ago. The net NPA ratio rose to 0.43% from 0.35% in the prior quarter and 0.37% a year ago.
Fresh slippages rose to Rs 1,875 crore from Rs 1,358 crore a quarter ago and Rs 1,314 a year ago. Fresh slippages were upgraded within the same quarter to Rs 246 crore against Rs 250 crore a quarter ago.
Credit costs also rose to 0.65% from 0.55% a quarter ago and 0.42% a year ago.
Kotak Mahindra Bank Q2 Earnings Highlights (Standalone)
Net Profit up 4.8% at Rs 3,344 crore. (Bloomberg estimate: Rs 3,424 crore).
Net interest income rose 11% to Rs 7,020 crore versus Rs 6,297 crore.
Net NPA at 0.43% versus 0.35% QoQ.
Gross NPA at 1.49% versus 1.39% QoQ.
Decline in the net interest margin also weighed on the bank's performance. The NIMs were 4.91% as of Sept. 30, lower than 5.02% a quarter ago and 5.22% a year ago.
The bank's advances increased 17% year-on year to Rs 4.2 lakh crore as of Sept. 30. Unsecured retail advances as a percentage of net advances were 11.3% against 11.6% a quarter ago.
Among customer assets, the consumer segment, which contributes the most, rose 18% to Rs 1.92 lakh crore, followed by commercial and corporate rising 14% and 13% on year respectively.
The small-medium enterprises book of the bank grew 31% on year in the September quarter.
Total deposits rose 16% to Rs 4.46 lakh crore. The current account-savings account ratio was 43.6% at the end of September against 43.4% a quarter ago and 48.3% a year ago.