Moneycontrol Bureau
Private sector lender Kotak Mahindra Bank's standalone profit grew by 200 percent quarter-on-quarter (up 28 percent year-on-year) to Rs 569.5 crore for July-September quarter, boosted by operating profit and lower provisions. However, higher tax cost limited bottomline growth.
The stock rallied 3.77 percent to close at Rs 688.60 amid high volumes on the BSE due to better-than-expected standalone numbers as well as marginal rise in asset quality. Earlier there were fears that ING Vysya Bank merger may inflate its NPAs (non-performing assets).Independent market expert Hemindra Hazari says analysts were concerned about asset contamination post the merger with ING Vysya Bank, but Kotak seems to have managed them quite well.
Net interest income, the difference between interest earned and interest expended, surged 28.1 percent (up 61.6 percent year-on-year) to Rs 1,679 crore compared to Rs 1,598.19 crore preceding quarter. Net interest margin inched up 10 basis points to 4.3 percent on sequential basis (it was at 5 percent in year-ago period).
Numbers were ahead of analysts' estimates. Both Bank of America Merrill Lynch and Motilal Oswal were estimated standalone NII of above Rs 1,600 crore and profit of over Rs 500 crore for the quarter.
Year-on-year numbers are not comparable as the company has started including ING Vysya Bank earnings from April 2015 onwards. Hence, quarter-on-quarter numbers are comparable.
"Integration process is progressing as planned and we are seeing positive traction in saving accounts growth, retail loans and insurance distribution," Uday Kotak, Executive Vice Chairman & Managing Director, Kotak Mahindra Bank says. Various initiatives have been kicked off for cost and income synergies which will start showing results in due course, he added.
Standalone numbers consist of only core banking operations while consolidated numbers include banking as well as other businesses like broking, insurance, investment banking etc.
Other income increased 4 percent to Rs 615.7 crore and operating profit shot up 75 percent to Rs 1,045 crore due to a 21.6 percent fall in operating expenses.
Provisions for bad loans fell 42.2 percent quarter-on-quarter to Rs 176.4 crore but increased 200.1 percent on yearly basis. Tax cost for the quarter was at Rs 299 crore, up nearly 3-fold compared to Rs 102 crore in preceding quarter.
Standalone gross non-performing assets (NPA) increased marginally to 2.35 percent from 2.31 percent and net NPA rose to 1.05 percent from 1.04 percent on sequential basis. Even its consolidated gross NPAs inched up slightly to 2.08 percent from 2.04 percent and net NPA remained flat at 0.93 percent in same period.
In absolute terms, standalone gross NPAs were up 9.6 percent to Rs 2,655.4 crore and net NPA climbed 8.4 percent to Rs 1,167.6 crore compared to preceding quarter.
Integration cost (for merger) for the quarter was at Rs 12 crore during the quarter against Rs 63 crore in June quarter and Rs 54 crore in FY15.
There was no corporate debt restructuring, no restructured assets under 5:25 scheme and no transfer to asset reconstruction companies during July-September quarter.
On consolidated basis, profit shot up 31.2 percent (up 82.3 percent quarter-on-quarter) to Rs 942 crore during the quarter compared to Rs 718 crore in year-ago period. Net interest income stood at Rs 2,278 crore during the quarter, up 5.3 percent on sequential basis and 43.8 percent on yearly basis.
| Subsidiaries (Rs crore) | Q2FY16 | Q-o-Q | Y-o-Y |
| Kotak Mahindra Prime | 127 | 119 | 125 |
| Kotak Securities | 78 | 67 | 66 |
| Old Mutual Life Insurance | 48 | 66 | 52 |
| Investments | 36 | 30 | 25 |
| AMC & Trustee Co | 23 | 20 | -1 |
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