Kotak Bank’s Q3 profit rises 15% on rapid growth in retail segment loans

Mumbai: Kotak Mahindra Bank’s standalone net profit increased by 15% in the quarter ended December 2021, driven by strong retail segment loan growth and also due to improved asset quality which led to a recovery in provisions during the quarter.

Net profit rose to Rs 2,131 crore from Rs 1,854 crore a year ago, largely due to 18% growth in advances on the back of a rapid 29% growth in loans to individuals.

Group chief financial officer Jaimin Bhatt said the bank had seen overall growth in client assets, driven by 38% growth in home loans, 27% growth in loans against property and double-digit growth. unsecured loans like credit cards, personal loans and also agriculture related loans.

“The growth spurt resulted in increased promotional, commercial and technology spending during the quarter,” Bhatt said, adding that the bank will continue to target growth for the remainder of the fiscal year.

Banking expenditure increased by 10% to Rs 5,559 crore in the quarter ended December 2021, from Rs 5,042 crore a year earlier.

On a consolidated basis, net profit increased by 31% to Rs 3,403 crore from Rs 2,602 crore a year ago. The bank contributed 63% of the group’s profits. The bank’s six subsidiaries recorded a year-on-year increase in net profit.

Strong loan growth pushed net interest income (NII) up 12% to Rs 4,334 crore from Rs 3,876 crore a year earlier. Growth in other income was subdued at just 6% to Rs 1364 crore from Rs 1290 crore a year ago, mainly due to the Rs 484 crore hit the bank suffered market losses on some of its bond investments . About 62 percent of the bank’s investments must be valued at market value.

Improved asset quality, aided by higher recoveries and lower slippages, helped the bank resume provisions. Net NPAs fell to 0.79% of net advances from 1.24% a year ago due to Rs 1086 crore recovery and upgrades during the quarter. The bank reversed provisions of Rs 132 crore during the quarter largely due to provisions related to Rs 279 crore Covid which it chose to recover.

Bhatt said the drop in slippages and NPAs gave the bank confidence it had enough provisions despite the recovery. The bank is still carrying Rs 1,000 crore in Covid-related provisions.

The total provisions held as of December 31, 2021 was Rs 7,269 crore.


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