Kotak Mahindra Bank Q1 results: Slippages came from tractor finance, retail unsecured loans, says CFO Jaimin Bhatt

Kotak Mahindra Bank's retail microfinance loans surged 91 percent over last year.

Kotak Mahindra Bank’s Chief Financial Officer Jaimin Bhatt on July 22 said the bank witnessed slippages from segments such as tractor finance and unsecured retail loans in the first quarter of the current financial year.

A loan becomes a non-performing asset (NPA) when there is no repayment of interest or principal for a period of 90 days. Banks need to set aside money in the form of provisions to cover such loans.

“Slippages came from tractor finance and retail unsecured loan,” Bhatt said.

Also read: Kotak Mahindra Bank Q1 results: Consolidated net profit up 50.62% at Rs 4,150.19 crore

In the April-June quarter, the bank reported slippages of Rs 1,205 crore, which is 0.4 percent of the net advances. Of this, Rs 288 crore was upgraded within Q1FY24.

In the same period last year, slippages were Rs 1,435 crore.

The tractor finance segment of the bank in the June quarter increased by 26 percent on-year to Rs 13,916 crore, and unsecured loans increased by 10.7 percent on-year.

Kotak Mahindra Bank in April-June recorded an increase in unsecured retail loans, when compared with the year-ago period, with credit card outstanding and microfinance loans surging aggressively.

Retail unsecured loans of the bank reached 10.7 percent of the total loan book as of June 2023 from 7.9 percent a year back, according to an investor presentation by the private sector lender.

Retail microfinance loans surged 91 percent over last year, while credit card outstanding jumped 67 percent.

Retail microloans are given to low-income groups who are typically small businessmen and vendors.

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

Bhatt further said there were slippages from the corporate side also in the April-June quarter. Corporate banking grew just 9 percent on-year to Rs 77,569 crore in April-June.

On the asset front, the private sector lender has witnessed an improvement, with the gross non-performing asset (GNPA) ratio falling to 1.77 percent from 1.78 percent in the quarter-ago period, and 2.24 percent in the year-ago period.

The net NPA ratio fell to 0.43 percent from 0.41 percent in the previous quarter and 0.69 percent in the year-ago period.

Kotak Mahindra Bank on July 22 reported a 50.62 percent year-on-year rise in its consolidated profit to Rs 4,150.19 crore in the first quarter of the current financial year on the back of a sharp increase in net interest income and improved asset quality.