Kotak Mahindra Bank’s standalone profit rose 5% to Rs 3,344 crore in the second quarter of current fiscal from Rs 3,191 crore in the same quarter previous year, helped by healthy growth in net interest income and improvement in asset quality.
The net profit was below expectations as Bloomberg analysts expected the lender to post Rs 3,424 crore net profit in the second quarter.
Despite higher provisions, the bank’s net interest income rose 11% to Rs 7,020 crore. Meanwhile, provisions for the quarter were at Rs 660 crore, up 80%.
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At the same time, the net interest margin (NIM) of the private sector lender compressed to 4.91% from 5.22% a year ago.
Addressing the reason behind the fall in NIM, Devang Gheewalla, the group chief financial officer at the Kotak Mahindra Bank said in the post result virtual conference, “So far this quarter, our NIM has fallen 11 basis points (bps) mainly because of slowdown in unsecured business due to the embargo. This has affected our earnings on assets, thereby impacting the NIM.”
Due to the Reserve Bank of India’s embargo, the bank’s credit card book has not experienced growth. Management indicated that 30-40% of slippage in Q2 FY25 originated from credit cards. They also expressed interest in pursuing more inorganic acquisitions to expand their customer base, provided these opportunities align with their criteria.
The bank’s advances increased 17% year-on year to Rs 4.2 lakh crore as on September 30. Unsecured retail advances as a percentage of net advances were 11.3%. Total deposits rose 16% to Rs 4.46 lakh crore. The current account-savings account ratio was 43.6% at the end of September against 43.4% a quarter ago.
Kotak Mahindra Bank’s customer assets, including advances and credit substitutes, grew 18% to Rs 4.5 lakh crore, showed the bank’s investor presentation. Secured loans like home loans and business banking loans grew steadily,
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