Kotak Mahindra Bank Q3 profit rises 37% to Rs 464.5 cr

Net interest margin declined 10 basis points on yearly basis (down 30 bps sequentially) to 4.7 percent in the quarter gone by.

Standalone other income (non-interest income) jumped 65 percent to Rs 494 crore year-on-year led by fee and treasury income. Fee income rose 45 percent year-on-year to Rs 328 crore and treasury income grew 122.64 percent to Rs 118 crore while operating profit during the quarter spiked 26 percent Y-o-Y to Rs 737.57 crore.

Advances during the quarter were up 22 percent Y-o-Y to Rs 64,641 crore while deposits rose 34 percent to Rs 73,066 crore.

Provisions against bad loans declined 57.1 percent Y-o-Y (down 44.2 percent Q-o-Q) to Rs 29.9 crore with provision coverage ratio at 56.82 percent at the end of December quarter. The sharp decline in provisions was due to write back of provisions.

Kotak Mahindra Bank says it restructured loans worth Rs 159.1 crore in the third quarter of FY15. Tax expenses during the quarter shot up 39 percent to Rs 243.13 crore on yearly basis.

Gross non-performing assets (NPA) as a percentage of gross advances declined 14 basis points Y-o-Y (down 2 bps Q-o-Q) to 1.87 percent and net NPA slipped 13 bps year-on-year (down 3 bps quarter-on-quarter) to 0.97 percent in the quarter gone by.

In absolute term, gross NPA rose 13.4 percent Y-o-Y (up 5 percent Q-o-Q) to Rs 1,220 crore and net NPA was up 7.8 percent year-on-year (up 3 percent sequentially) to Rs 630 crore in the third quarter.

Capital adequacy ratio (as per Basel III norms) stood at 15.96 percent during the October-December quarter, declined compared to 16.44 percent in previous quarter and 17.43 percent in the year-ago period.

Consolidated Earnings

On consolidated basis, Kotak Mahindra Bank's third quarter net profit climbed 21.2 percent to Rs 716.6 crore and NII rose 12.9 percent to Rs 1,579 crore on yearly basis. Net interest margin stood at 4.7 percent in the December quarter, declined from 5 percent in previous quarter and 4.9 percent in the year-ago quarter.

Other income surged 34.63 percent Y-o-Y to Rs 1,925.64 crore led by profit on sale of investments and insurance business.

Profit on sale of investments including revaluation (insurance business) jumped 63 percent to Rs 527.56 crore and premium on insurance business grew 11.7 percent to Rs 656.52 crore. Other income (including commission, fees, exchange, brokerage etc and profit on sale of investments excluding insurance business) surged 42.88 percent to Rs 741.56 crore during the same period.

Within the consolidated numbers, securities and investments businesses saw a good year-on-year jump of 30.4 percent and 118.2 percent, respectively. Kotak Mahindra Prime business was down 2.4 percent on yearly basis and old mutual life insurance dropped 15 percent in the quarter ended December 2014.

Meanwhile, the shareholders of banks approved the merger of ING Vysya Bank with Kotak Mahindra Bank on January 7, 2015 with swap ratio of 725 shares of Kotak for every 100 shares of ING. This amalgamation is subject to the approval of the Reserve Bank of India and the Competition Commission of India.

During the quarter, the bank also received approval from the RBI to form a subsidiary to enter the general insurance business.

At 12:19 hours IST, the scrip of Kotak Mahindra Bank was quoting at Rs 1,393, up 0.29 percent after erasing some morning gains.