High delinquencies in microfinance segment widen Q3 slippages, says Kotak Mahindra Bank

Earlier today, the bank reported a 10 percent rise in its net profit at Rs 4,701.02 crore in the third quarter of FY25

Kotak Mahindra Bank's fresh slippages in the third quarter of the current financial year increased on-year due to higher delinquencies in microfinance sector, said chief financial officer Devang Gheewalla during a post-earnings conference.

In October-December quarter, the lender had reported a 41 percent increase in fresh slippages. However, on quarterly basis, it fell around 12 percent.

The private lender’s fresh slippages in the reporting quarter stood at Rs 1,675 crore, as compared to Rs 1,177 crore in a year ago period, and Rs 1,875 crore in a quarter ago period.

Gheewalla also said that higher delinquencies in the microfinance sector is also due to sector-wide issue, and the disbursement in the sector has also dried up.

As per investor presentation of the bank, retail microcredit advances fell 3 percent on-year and 16 percent on-quarter.

Retail microcredit for the bank in December quarter stood at Rs 8,225 crore, as compared to Rs 8,509 crore in a year-ago period, and Rs 9,776 crore in a quarter-ago period.

“We expect that the stress in the MFI sector may come down in next couple of quarters,” Gheewalla said.

Earlier today, the bank reported a 10 percent rise in its net profit at Rs 4,701.02 crore in the third quarter of FY25, compared to Rs 4,264.78 crore in the year-ago period.

However, the net profit declined close to 7 percent sequentially from Rs 5,044.05 crore in the September quarter.