Kotak Mahindra Bank's investment in government bonds rises 53.3% in Q1

Kotak Mahindra Bank’s consolidated profit zoomed 50.62 percent YoY to Rs 4,150.19 crore in the June quarter.

Kotak Mahindra Bank on July 22 reported a 53.3 percent on-year rise in its investments in government securities in the first quarter of the current financial year against a fall of 27.2 percent in the year-ago quarter.

The moderation in the yields following a rate pause by the Reserve Bank of India (RBI) since April could have prompted the Mumbai-based private lender to increase exposure in government securities, dealers said. Bond yields and prices move in opposite directions.

In the two policy reviews of the current financial year, the RBI’s monetary policy committee (MPC) has held the repo rate steady at 6.5 percent as inflation cools. The MPC’s next meeting will be from August 8 to 10.

According to an investor presentation, Kotak Mahindra Bank’s investment in government securities rose to Rs 94,038 crore in April-June from Rs 61,349 crore in the year-ago period.In the previous quarter, it stood at Rs 89,853 crore.

The total investment in April-June rose around 39 percent on-year to Rs 1.24 lakh crore from Rs 89,183 crore in the year-ago period.

In the first quarter of the current financial year, the government bond yields, especially on the benchmark bond eased around 19 basis points (bps). One basis point is one-hundredth of a percentage point.

According to data compiled from Clearing Corporation of India Limited (CCIL), the 10-year benchmark 7.26 percent 2033 bond, which was trading at 7.3056 percent on April 3, fell to 7.1166 percent on June 30.

On July 3, Moneycontrol reported that investments by banks in central and state government securities rose 15.2 percent on-year to Rs 57.83 lakh crore on June 16, according to RBI data.

The investments increased 15.2 percent on-year on June 16 compared with 6.6 percent growth on-year as on June 17, 2022.

In absolute terms, the investments by banks stood at Rs 57.83 lakh crore on June 16 against Rs 50.21 lakh crore on June 17, 2022, and Rs 47.11 lakh crore on June 18, 2021.

Earlier in the day, Kotak Mahindra Bank reported  a 50.62 percent year-on-year rise in its consolidated profit at Rs 4,150.19 crore in the June quarter, bolstered by a spike in net interest income and improved asset quality.

On a standalone basis, net profit rose 66.7 percent on-year to Rs 3,452.30 crore, beating analysts' expectations of a 53 percent growth at Rs 3,182 crore, the bank said in a release.

In the year-ago quarter, the Mumbai-based private sector lender reported a standalone net profit of Rs 3,495.59 crore.