Kotak Mahindra Bank Q4 Results: Profit Up 17.6% On Higher Other Income

Kotak Mahindra Bank Ltd.'s profit rose in the fourth quarter, beating analysts' estimates.

The private lender's standalone net profit rose 17.6% year-on-year to Rs 4,133.30 crore in quarter ended March, according to an exchange filing on Saturday. Analysts polled by Bloomberg estimated a net profit of Rs 3,303.66 crore.

Net interest income, or core income, rose 13.2% year-on-year to Rs 6,910 crore. Other income rose 36.2% year-on-year to Rs 2,978.29 crore.

Kotak Mahindra Bank Q4 Results Highlights (Standalone)

• Net profit up 17.6% to Rs 4,133.3 crore vs Rs 3,496 crore (YoY)

• Net interest income 13.2% to Rs 6,910 crore vs Rs 6,103 crore (YoY)

• Gross NPA ratio 1.39% vs 1.73% (QoQ)

• NNPA ratio 0.34% vs 0.34% (QoQ)

Asset quality for the lender improved with gross non-performing asset ratio improving 34 basis points quarter-on-quarter to 1.39%. Net NPA, however, stayed flat at 0.34% sequentially.

In its investor presentation, the bank explained that it wrote-off Rs 1,455 crore worth retail unsecured loans (fully provided). This was 4.2% of retail unsecured loans.

Provisions for the quarter rose 78.7% year-on-year to Rs 263.7 crore. The bank wrote-back provisions worth Rs 157 crore on account of alternate investments funds, out of the Rs 190 crore-worth made in Q3.

Net interest margin, a profitability indicator, remained flat at 5.28% for the second consecutive quarter, compared to 5.22% in the previous quarter.

The credit cost for the bank was 50 basis points (bps) annualised in the fourth quarter of FY24, up from 40 bps in the previous quarter.

The lender's advances, including retail micro-finance, increased by 20% year-on-year to Rs 3.91 lakh crore in the quarter ended March. Unsecured retail advances as a percentage of net advances stood at 11.8%, slightly up from 11.6% in the previous quarter.

Specifically, home loans and LAP (Loan Against Property) grew by 15% year-on-year to Rs 1.06 lakh crore; personal loans, business loans, and consumer durables grew by 27% year-on-year to Rs 20,049 crore; and credit cards grew by 44% year-on-year to Rs 14,505 crore.

The bank also completed the acquisition of Sonata Microfinance in FY24.

On April 24, the RBI barred Kotak Mahindra Bank from issuing fresh credit cards and onboarding of new customers through its online and mobile banking channels with immediate effect.

In its Q4 investor presentation, the bank said that these directions will not materially impact its overall business.

The bank also announced plans to increase investments in its IT systems, focusing on a comprehensive plan to demonstrate sustainable compliance with the Baseline Cyber Security Framework for Banks and strengthen digital payment security controls, as stated in the presentation.

The current account and savings account ratio of the bank stood at 45.5% in the quarter.

Average current deposits grew by 4% year-on-year to Rs 60,160 crore, while average savings deposits grew by 5% year-on-year to Rs 1.23 lakh crore in the quarter ended March. Term deposits saw the highest growth, reaching Rs 2.24 lakh crore, up by 35% year-on-year.

The capital adequacy ratio (CAR) of the bank stood at 20.5%, with a Common Equity Tier 1 (CET-1) ratio of 19.2% for the quarter.