Kotak Mahindra Bank, the country's third largest private sector lender by market cap, has reported a 16.1 percent year-on-year growth in profit at Rs 1,853.5 crore for the quarter ended December 2020, supported by NII and operating profit, but higher provisions restricted profit growth. Profit in the corresponding period was at Rs 1,596 crore.
The net interest income, the difference between interest earned and interest expended, has grown by 16.8 percent to Rs 4,007 crore in Q3FY21, compared to Rs 3,430 crore in same period last year.
Advances at the end of December 2020 stood at Rs 2,14,103 crore, declining 1.2 percent compared to Rs 2,16,774 crore as of December 2019, but reported 4.5 percent sequential growth. Deposits grew by 10.8 percent YoY and 1.4 percent QoQ to Rs 2,65,304 crore in Q3FY21.
On the asset quality front, gross non-performing assets (NPA) as a percentage of gross advances declined 29 bps sequentially to 2.26 percent and net NPA fell 14 bps to 0.50 percent for the quarter ended December 2020.
The bank has not classified any NPAs since August 31, 2020, following the the interim order of Supreme Court. "Had the bank classified the borrowers more than 90 days overdue on December 31, 2020 as NPA, then gross NPA would be 3.27 percent (against 2.70 percent as of September 2020) and net NPA would be 1.24 percent (against 0.74 percent as of September 2020)," said Kotak Mahindra Bank in its BSE filing.
However, the bank has made provision for such advances including towards interest accrued but not collected for the entire period, with moratorium, it added.
The bank reported provisions and contingencies at Rs 599 crore as of December 2020, increasing sharply by 34.9 percent year-on-year and 62.5 percent compared to previous quarter.
COVID related provisions as of December 2020 stood at Rs 1,279 crore, while no COVID-19 provision dipped into during Q2FY21 and Q3FY21. "In accordance with the Resolution Framework for COVID-19 announced by RBI on August 6, 2020, as at December 2020, the bank has approved, for certain eligible borrowers, one-time restructuring of 0.28 percent of net advances," said Kotak Bank.
Non-interest income in Q3FY21 declined 0.5 percent to Rs 1,334.38 crore and pre-provision operating profit surged 29.1 percent to Rs 3,083.34 crore compared to corresponding period.
Consolidated net profit of the company increased 10.8 percent year-on-year to Rs 2,602 crore and net interest income grew by 16.2 percent to Rs 5,160.1 crore in the quarter ended December 2020.
Kotak Mahindra Bank said the subsidiaries & associates net contribution was 29 percent of the consolidated PAT. Kotak Securities' profit grew by 43.8 percent to Rs 184 crore in Q3FY21 compared with corresponding period, but Kotak Mahindra Prime reported a 20.3 percent year-on-year decline in profit at Rs 149 crore for December quarter 2020.
Kotak Mahindra Life Insurance showed marginal increase in profit at Rs 167 crore for the quarter ended December 2020, compared to Rs 166 crore in the corresponding period. Kotak Asset Management's profit was unchanged at Rs 91 crore YoY.
In December last year, the Reserve Bank of India has granted approval for the re-appointments of Uday Kotak as MD & CEO; Dipak Gupta as Joint MD, and Prakash Apte as Part-time Chairman, for a period of 3 years, with effect from January 2021.
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Kotak Mahindra Bank shares clocked a massive 57 percent return in the quarter ended December 2020, following the rally across banking sector amid easing NPA concerns and strong hope for economic recovery in coming years. However, there was some profit booking in the current year 2021 as it fell 8 percent in the month of January so far.