Kotak Mahindra Bank clocked a 32.8 percent year-on-year (YoY) growth in standalone profit at Rs 1,682.4 crore in the quarter ended March 2021, impacted by higher provisions. The profitability was supported by higher net interest income (NII), other income and pre-provision operating profit.
Numbers missed analysts' expectations. Profit was estimated at Rs 1,800 crore and NII at Rs 4,060 crore for the quarter, according to the average estimates of analysts polled by CNBC-TV18.
Net interest income in Q4 FY21 grew by 8 percent to Rs 3,842.81 crore compared to the year-ago, with moderate 1.8 percent YoY growth in advances at Rs 2.23 lakh crore during the quarter. However, net interest margin contracted to 4.39 percent from 4.72 percent in the same period.
Deposits, at Rs 2.8 lakh crore in the March quarter, grew by 6.6 percent year-on-year, missing analysts' expectations of over 10 percent growth.
Provisions and contingencies remained elevated at Rs 1,179.41 crore for the March quarter 2021, increasing 12.6 percent compared to the year-ago quarter and rose 181.8 percent QoQ.
During the quarter, the Supreme Court vacated the stay on NPA recognition and granted relief for interest on interest. Till December 2020, w.r.t cases not considered as NPA, Kotak Mahindra Bank had considered full hit for provisions and income as provisions for advances.
"Post the Supreme Court order, the bank has retrospectively, reversed income and consequently adjusted provisions and contingencies. Further, the bank has created a liability of Rs 110 crore towards estimated interest relief and has reduced the same from interest earned," said the bank.
The bank further said there was no fall in the COVID-19 provision during Q4 FY21. COVID-19 provisions were retained at Rs 1,279 crore as of March 2021, the bank added.
Total provisions (including specific, standard, COVID-19 related, etc.) as on March 2021 were Rs 7,021 crore, which was 95 percent of gross NPA, the bank said.
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Non-interest income (other income) in Q4 FY21 surged 30.9 percent year-on-year to Rs 1,950 crore, while the pre-provision operating profit grew by 25 percent to Rs 3,407.5 crore compared to the year-ago quarter.
Asset quality weakened further in the March quarter with gross NPAs, as a percentage of gross advances, climbing to 3.25 percent compared to 2.26 percent in the previous quarter, while net NPA jumped to 1.21 percent at the end of Q4 FY21, compared to 0.5 percent in Q3 FY21. But gross and net NPAs dipped 2 bps and 3 bps respectively compared to proforma NPAs reported at the end of December 2020.
In the financial year FY21, the bank recorded a 17.1 percent growth in profit at Rs 6,965 crore and net interest income grew by 13.6 percent to Rs 15,340 crore compared to the previous year.
The consolidated profit of the bank stood at Rs 2,589 crore in Q4 FY21, up by 35.9 percent YoY. Subsidiary Kotak Mahindra Prime registered 14.3 percent YoY growth at Rs 184 crore, Kotak Securities' 47.9 percent growth at Rs 241 crore, and Kotak Mahindra Life Insurance' 17 percent growth at Rs 193 crore YoY. Among others, Kotak AMC and TC reported a 13.6 percent YoY growth in profit and international subsidiaries reported a 66.7 percent growth in profit during the quarter.
Kotak Mahindra Bank shares corrected after earnings came in below expectations, falling 2.62 percent to Rs 1,702.80 on the BSE.