Kotak Mahindra Bank on January 28 reported a 15 percent year-on-year rise in net profit to Rs 2,131 crore for the quarter ended December, which was above analysts' expectations of Rs 2,073 crore.
The outperformance on the bottomline was thanks to the reversal of provisions to the tune of Rs 131 crore in the reported quarter, of which Rs 100 crore were made for COVID-19 contingencies.
The private sector lender's net interest income, the difference between the interest income the bank earned from its lending activities and the interest it paid to depositors, in the quarter grew 12 percent on-year to Rs 4,334 crore, a tad below the Street's expectation of Rs 4,474.7 crore.
“NII momentum expected to improve with focus on revving loan growth, in addition, to support from funding cost tailwinds,” brokerage firm Prabhudas Lilladher said in an earnings preview note.
The lender's margins surprised the Street coming in at 4.62 percent for the reported quarter as against an expectation of 4.45-4.5 percent.
The lender's focus on growth in the December quarter took a toll on its operating performance as operating profit declined 7.1 percent year-on-year to Rs 2,701 crore, which was sharply below Street's estimate of Rs 3,249 crore.
Strong asset quality performance
Asset quality of the lender showed a sharp improvement on a sequential basis in line with what has been reported by other lenders. Kotak Bank's gross non-performing assets ratio stood at 2.71 percent at the end of the December quarter against 3.19 percent in the previous quarter.
Similarly, the net NPA ratio improved to 0.79 percent from 1.06 percent in the previous quarter. Provision coverage ratio improved to 71 percent from 63 percent in the year-ago quarter, the bank said in an investor presentation.
Kotak Bank's slippage was at Rs 750 crore as against recoveries of Rs 1,086 crore. The bank holds COVID-19 related provisions of Rs 1,000 crore, while total provisions were at Rs 7,269 crore.
Kotak Mahindra Bank had indicated in the previous quarter that it will get more aggressive on customer additions and loan growth in the coming quarters.
The lender's advances in the quarter grew 18 percent on-year in the reported quarter led by a 38 percent growth in home loans, a 21 percent rise in small business loans and an 8 percent improvement in corporate loans.
The private sector bank said it added 2.1 million new customers in the reported quarter as against 800,000 new additions in the year-ago period. Its total customer base now stands at 30.7 million.
Kotak Bank's deposits in the quarter grew by 15.1 percent on-year to Rs 3.05 lakh crore, while current account-savings account ratio improved to 59.9 percent from 58.9 percent in the year-ago quarter.Shares of Kotak Bank were 1.6 percent at Rs 1,919.90 on the National Stock Exchange.