Kotak Bank Q1 PAT up 67% on strong NII, other income growth

Kotak Mahindra Bank posted a net profit of ₹3,452 crore for Q1 FY24, up 67 per cent y-o-y led by strong growth in net interest and other income.

Fees and services income was up 20 per cent y-o-y to ₹1,827 crore for the quarter.

Sequentially, the profit after tax was 1.3 per cent lower on account of higher provisions due to increase in slippages as the bank maintained higher provisions on restructured and unsecured loans.

Net Interest Income (NII) was up 33 per cent y-o-y at ₹6,234 crore. Net Interest Margin (NIM) for the quarter was 5.57 per cent.

In the earnings call, the management said that it expects NIM to keep moderating in the coming few quarters due to deposit repricing and eventually stabilise at the long-term average of around 5.25 per cent.

Customer Assets, including advances and credit substitutes, increased by 18 per cent yoy to ₹3.6 lakh crore as at June 30. However, the bank continues to be cautious on growing the corporate portfolio given the pricing issues in the market.

The bank sees loan growth for FY24 in high teens to early 20, also aided by a pick up in corporate loans which grew 7 per sequentially during the quarter.

Unsecured retail advances (including Retail Micro Finance) accounted for 10.7 per cent of net advances as of June 30, up from 7.9 per cent a year ago, with growth across segments such as credit cards, personal and business loans and MFI, the bank said.

On stress in the unsecured book, Joint MD Dipak Gupta said that the portfolio is holding well for now given also that the growth is on a small base. The bank, is however, continuously monitoring and watching the portfolio to ensure portfolio quality, he said.

Deposits of the bank were at ₹3.9 lakh crore as of June 30, led by 49 per cent growth in CASA deposits, largely led by current account deposits which grew 8 per cent y-o-y.

Kotak Bank’s cost of funds increased sequentially, largely due to the increase in the share of higher cost ActivMoney and term deposits even as cost for savings deposits declined due to 1 per cent y-o-y degrowth.

The bank saw slippages of ₹1,205 crore in Q1, of which ₹288 crore were written back during the quarter itself. Slippages were slightly elevated, driven by unsecured retail loans and tractor finance. Recoveries and upgrades were at ₹692 crore for the quarter.

Gross NPA ratio of the bank improved to 1.77 per cent from 1.78 per cent a quarter ago and 2.24 per cent a year ago. Net NPA ratio at 0.40 per cent was also better than 0.62 per cent in the previous year and 0.37 per cent in the previous quarter.