Kotak Mahindra Bank on January 21 reported healthy standalone third-quarter earnings with double-digit growth in the bottom line on strong growth in net interest income and improvement in asset quality.
Here are the top five takeaways from the lender's Q3FY23 earnings:
Strong net profit
The bank’s standalone profit after tax (PAT) rose 31 percent on-year to Rs 2,792 crore in the December quarter.
As per a media release, consolidated PAT for Q3FY23 was Rs 3,995 crore, up 17 percent from Rs 3,403 crore in Q3FY22.
The profit growth was higher than estimates. Analysts were estimating a 22 percent rise in its net profit for the October-December quarter.
An average of the estimate of seven brokerages polled by Moneycontrol showed that the lender’s net profit is expected to be Rs 2,593.4 crore for the December quarter, compared with Rs 2,130 crore a year ago.
Net interest income
Net interest income (NII), or the difference between interest earned and interest expended, rose 30 percent on-year to 5,653 crore during the October-December quarter.
In the same period last year, the lender had reported a net interest income of Rs 4,334 crore, according to the media release issued by the bank.
Analysts were estimating net interest income to be Rs 5,377.7 crore with a year-on-year growth of 24 percent.
While the net interest margins of the bank stood at 5.47 percent in the December quarter, as against 4.62 percent in the corresponding quarter last year.
Also read: Kotak Mahindra Bank beats Street forecast, Q3 net jumps 31% to Rs 2,792 crore
Asset quality
The asset quality of the bank improved sharply in the reporting quarter with gross non-performing asset (NPA) ratio declining 81 basis points (Bps) on-year and net NPA falling 36 bps on-year.
As of December 31, 2022, gross NPA was 1.90 percent and net NPA was 0.43 percent.
Credit cost on advances for the reporting quarter was 27 bps (annualised), including standard provisioning, excluding reversal of COVID and restructuring.
The provision coverage ratio stood at 77.6 percent.
Increase in advances
Advances of the bank have seen a sharp rise of 23 percent to Rs 3.11 lakh crore as on December 31, 2022, as compared to Rs 2.53 lakh crore on December 31, 2021.
Retail microfinance loans grew the fastest at 121 percent, followed by credit card outstanding which grew 85 percent on year.
Customer assets, which comprise advances and credit substitutes, increased by 24 percent to Rs 3.4 lakh crore as of December 31, 2022, from Rs 2.8 lakh crore as of December 31, 2021.
CASA ratio as of December 31, 2022, stood at 53.3 percent.
Higher other income
The other income of the bank in the reporting quarter has increased, with income from fees and services registering 23 percent on-year growth to Rs 1,847 crore.
The overall other income of the bank increased to Rs 2,100 crore, as compared to Rs 1,364 crore.
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