Asset quality weakened during the quarter with gross non-performing assets as a percentage of gross advances rising 45 bps sequentially to 2.7 percent.
India's fourth-largest private sector lender Kotak Mahindra Bank has reported an 8.5 percent year-on-year (YoY) decline in standalone net profit for the quarter ended June 2020, dented by higher provisions, primarily with respect to COVID-19, and lower other income.
Profit declined to Rs 1,244.45 crore, which was on expected lines given the higher COVID-19 related provisions, compared to Rs 1,360.2 crore reported in the year-ago quarter.
Net interest income increased by 17.8 percent YoY to Rs 3,723.85 crore during June quarter 2020 which matched analysts' expectations. Net interest margin came in at 4.4 percent for the quarter against 4.48 percent in Q1 FY20.
During the June quarter, the bank raised Rs 7,442 crore through a QIP issuance of 6.5 crore equity shares.
Deposits grew by 12.3 percent YoY to Rs 2,61,524 crore in Q1 FY21, but loan book declined 1.9 percent to Rs 2,03,998 crore.
"Average savings deposits crossed Rs 1 lakh crore, growing by 34 percent to Rs 1,05,673 crore in Q1 FY21 compared to Rs 78,654 crore in Q1 FY20. Average current account deposits grew by 10 percent to Rs 36,066 crore in Q1 FY21 compared to Rs 32,679 crore for Q1 FY20," said the bank.
CASA ratio as on June 2020 stood at 56.7 percent versus 50.7 percent in June 2019.
Asset quality weakened during the quarter with gross non-performing assets as a percentage of gross advances rising 45 bps sequentially to 2.7 percent, while net NPAs rose 16 bps QoQ to 0.87 percent in Q1.
Slippages for the quarter were at Rs 796 crore which was higher than Rs 491 crore in March quarter 2020 and Rs 751 crore in June quarter last year.
"Moratorium 2 (June-August) is 9.65 percent of loan book as of June 2020, which included 9.15 percent from moratorium 1 (March-May). Around 80 percent of moratorium 2 book is secured," Kotak Mahindra Bank said in its BSE filing.
Provisions and contingencies shot up 203.7 percent to Rs 962.01 crore compared to the year-ago quarter, but the same declined 8.2 percent on a YoY basis.
Kotak Mahindra Bank said it had made additional COVID-19 related general provision of Rs 616 crore in Q1 FY21.
"COVID-19 related provisions as on June 2020 stand at Rs 1,266 crore (0.62 percent of net advances). Total provisioning towards advances (including specific, standard and COVID-19 provisions) is higher than the gross non-performing assets of the bank," it added.
Non-interest income during the quarter fell sharply by 41.3 percent to Rs 773.54 crore in YoY basis, but pre-provision operating profit increased 9.4 percent to Rs 2,623.71 crore in Q1 FY21.
Consolidated profit declined 4.1 percent YoY to Rs 1,852.59 crore for the quarter, but net interest income grew by 15.9 percent to Rs 4,793.5 crore in Q1.
Among subsidiaries, Kotak Securities reported 53.6 percent YoY jump in profit at Rs 169 crore, Kotak Mahindra Life Insurance reported 20.1 percent growth in PAT at Rs 161 crore and international subsidiaries saw 86.2 percent growth in profit at Rs 54 crore.
However, Kotak Mahindra Prime saw 55.6 percent YoY decline in profit at Rs 68 crore, Kotak Mahindra Investments saw 32 percent fall at Rs 43 crore and Kotak Mahindra Capital witnessed a 86.7 percent decline in PAT at Rs 6 crore in Q1 FY21.The stock fell more than 2 percent on July 27 and was quoting Rs 1,320.65 on the BSE at 14:22 hours IST.