India’s Kotak Mahindra Bank quarterly net profit jumps 31%

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MUMBAI, Jan 21 (Reuters) – India’s Kotak Mahindra Bank reported a 31% rise in net profit on Saturday for the October-December quarter, helped by a strong top line and growth in healthy loans.

The lender’s net profit reached 27.92 billion rupees ($344.2 million), compared with 21.31 billion in the same period last year and with an average analyst expectation of 26.28 billion, according to the data of Refinitiv IBES.

Net interest income – the difference between interest earned and interest spent – ​​rose 30.4% from a year ago to 56.53 billion rupees, while other income rose almost 54%. Net interest margin (NIM) was 5.47% compared to 4.62% last year.

The bank said it expects a further increase in NIM in the short term, although this may decrease as borrowing costs also increase.

“As we are seeing that interest rates are rising, we will see some increase in NIM,” said Jaimin Bhatt, the group’s chief financial officer, during a conference call with journalists.

Lender advances grew by more than 23%, while deposits increased by almost 13% year-on-year. The bank’s current account and savings account (CASA) ratio was 53.3% on 31 December.

Indian banks are looking to finance the current pace of credit growth by increasing their deposit bases. Loans by Indian banks rose by almost 15% in the fortnight ended December 30 compared with a year ago, while deposits rose by just 9.2%, according to the latest data from the Reserve Bank of India.

Kotak Mahindra Bank’s gross bad loans as a percentage of total loans – a key measure of asset quality – stood at 1.90% at the end of December, against 2.08% at the end of September. Its net non-performing asset ratio was 0.43%, against 0.55%.

The bank’s provision coverage ratio was 77.6% at the end of December. It had Covid-related provisions worth 4 billion rupees. (Reporting by Siddhi Nayak and Nupur Anand; Editing by Raju Gopalakrishnan and David Holmes)

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