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Kotak Mahindra Bank Q4 net profit up 33% at Rs 1,404 cr

Abhijit Lele / Mumbai 28 Apr 17 | 03:57 AM

Private sector lender Kotak Mahindra Bank’s consolidated net profit rose by 33% to Rs 1,404 crore for the January-March 2017 quarter from Rs 1,055 crore a year ago on the back of higher net interest income, fees and commissions.

Net interest income, the difference between interest earned and interest expended, increased by 17% to Rs 2,890 crore. Other income that includes fees, commission etc also increased to Rs 4,299 crore as compared to Rs 2,593 crore in the same quarter last year.

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Net interest margin, a key indicator of the bank's profitability expanded to 4.6% from 4.4% in the corresponding quarter last year. 

Consolidated net profit for the financial year ended March 2017 (FY17), went up by 43% to Rs 4,940 crore from Rs 3,459 crore in FY16.

Standalone net profit rose by 40% in the March quarter to Rs 976 crore. For the full year 2016-17, standalone net profit grew 63% to Rs 3,411.5 crore. 

The bank saw a 41% increase in its savings account growth and a 19% rise in its current account growth. Current and savings deposits as a percentage of total deposits grew from 38% in March 2016 to 44% in March 2017.  

Consolidated advances rose 15% year-on-year to Rs 1,67,125 crore. Uday Kotak, executive vice-chairman and managing director, Kotak Mahindra Bank, “Credit grew by 20% in fourth quarter of FY17. With signs of pick-up in credit demand, the bank is confident of growing the FY18 loan book at levels seen in the fourth quarter." 

The bank saw a slight uptick in bad loans with the percentage of gross non-performing assets (NPA) increasing to 2.25%, up 14 basis points (bps) sequentially and 19 bps year-on-year. Net NPA also increased to 1.09% in March 2017 from 0.93% a year ago. Most of the slippages in the fourth quarter were from the loan book of ING Vysya Bank, which was merged with Kotak Mahindra Bank. 

Kotak said that the credit cost, which is the amount set aside for stressed loans and standard assets, declined to 61 bps at the end of March 2017 from 82 bps in last year. The trend of declining credit costs will continue in 2017-18, the bank said.

At the end of the March quarter, restructured loans considered standard were down to 0.07% of net advances to Rs 102 crore. 

On March 29, 2017, Kotak Mahindra Bank launched 811, the zero-charge digital bank account, to promote a digital banking system via mobile phones. 

Standalone other income grew 47% to Rs 1,003 crore in the March quarter. Elaborating on the rise in other income, group chief financial officer Jaimin Bhatt said, “Of this, Rs 750 crore came from fees and commissions and the balance from areas like treasury operations."

The bank remains well-capitalised with a consolidated capital adequacy ratio of 17.2% with tier-1 ratio at 16.5% at the end of March 2017. 

On its capital raising plan and reducing the promoters’ stake, Kotak said the bank would work on it after its shareholders’ meeting on May 9, 2017. The bank board had cleared a proposal to raise equity capital by issuing 62 million shares, which will need shareholders’ nod. Based on Thursday’s closing price of Rs 914.55 per share, it could raise about Rs 5,600 crore.

Kotak Mahindra and associates are significant shareholders in Business Standard Pvt Ltd

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