Kotak Mahindra Bank Ltd Monday reported an over 15% jump in March quarter net profit, boosted by higher net interest income and other income.
Net profit for the quarter stood at Rs1,124.05 crore against Rs976.48 crore a year ago, the bank said. A Bloomberg poll of 11 analysts had expected the bank to post a net profit of Rs1,170.20 crore.
Net interest income (NII), or the core income a bank earns by giving loans, increased 19.4% to Rs2,579.75 crore, versus Rs2,161.37 crore last year. Other income stood at Rs1,151.63 crore, up 14.86% from Rs1,002.65 crore a year ago.
Uday Kotak, who has been re-designated as managing director and chief executive officer, said the profit growth would have been even higher, had it not been for the one-time hit of Rs82 crore related to employee costs from change in gratuity limits.
Provisions and contingencies rose 14.8% to Rs306.91 crore from Rs267.37 crore a year ago. On a quarter-on-quarter basis, they rose 44.24% from Rs212.77 crore.
Kotak said overall provisioning costs, which fell to 56 basis points in the previous fiscal from 61 basis points a year before, is expected to fall further. However, this will also depend on the movement in the bond market.
Gross non-performing assets rose to Rs3,825.38 crore at 31 March from Rs3,578.61 crore in the same quarter last year.
The bank reported an improvement in asset quality.
As a percentage of total loans, gross NPAs stood at 2.22% compared with 2.31% in the previous quarter and 2.59% in the year-ago quarter. Net NPAs were at 0.98% in the March quarter compared to 1.09% in the previous quarter and 1.26% in the same quarter last year.
On the overall stressed assets situation, Kotak said his group is keen on participating in the auctions of companies under the Insolvency & Bankruptcy Code, but the focus will be on ensuring that such participation will yield a fair risk-return ratio.
Kotak Realty Fund, along with Cube Highways, has submitted a bid for Jaypee Infratech, one of the 12 cases referred for insolvency proceedings following the Reserve Bank of India’s (RBI) directive last year.
Kotak said in cases where banks have received a single bid, the value of that bid is close to liquidation value. However, one must not rule out the resolution of assets via liquidation.
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