Kotak Mahindra Bank consolidated Q4 net up 27% to ~ 17.89 bn

Uday Kotak re-designated MD & CEO from May 1, Prakash Apte appointed part-time chairman

Kotak Mahindra Bank reported 27 per cent rise in its fourth quarter consolidated net profit for 2017-18 on healthy growth in advances and a higher base of low-cost deposits.

Profit after tax on a consolidated level rose to ~17.89 billion for the quarter ended March 2018 from ~14.04 billion in the year ago period.

Consolidated advances grew 23.3 per cent to ~2.06 trillion year-on-year (YoY) at the end of March 2018. For the full year 2017-18, the bank’s net profit grew 25.5 per cent to ~62 billion.

At the standalone level, the bank reported a 15 per cent rise in its net profit to ~11.24 billion, against ~9.76 billion in the year ago quarter.

The bank took a one-time hit of ~930 million due to the increased gratuity limit, excluding which the profit growth would have been in excess of 20 per cent, said executive vice-chairman and MD Uday Kotak.

Gross non-performing assets (GNPA) as a percentage of total advances on a consolidated basis moderated to 1.95 per cent for the quarter, against 2.01 per cent in the December 2017 quarter and 2.25 per cent a year ago.Net NPA stood at 0.86 per cent for the present quarter, down 8 basis points sequentially and 23 basis points YoY.

Provisioning for the March quarter stood at ~3.13 billion, up from ~2.99 billion in the year ago quarter and ~2.26 billion in the December quarter.

Consolidated capital adequacy ratio improved to 18.82 per cent as on March 2018, up from 16.77 per cent a year ago.

Its consolidated net interest income (NII) for increased by 17 per cent to ~33.89 billion in Q4 FY17. Net interest margin (NIM) for March 2018 quarter stood at 4.3 per cent, up 10 basis points sequentially but down 30 basis points YoY. The bank’s NIM outlook for FY18-19 is 4.2-4.25 per cent.

The bank expects a loan growth of over 20 per cent in FY19 and foresees a pick-up in the economy.

For the standalone bank, average savings deposits grew by 58 per cent, while average current account deposits were up 25 per cent. As a result, the ratio of current and savings accounts to total deposits grew from 44 per cent a year ago to 50.8 per cent in March 2018.

“We have seen growth across all segments except the SME (small and medium enterprises) segment,” said chief financial officer Jaimin Bhatt.

The bank also announced that Uday Kotak would be redesignated as MD and CEO from May 1 in line with good governance practice. Uday Kotak was the chairman of the corporate governance committee, constituted by the market regulator Securities and Exchange Board of India, which submitted its report in October 2017. One of the committee’s recommendations was to separate the roles of chairman and CEO in listed companies.

Shankar Acharya, who is the bank’s part-time chairman since 2006, will retire in July 2018, and did not seek reappointment. The board appointed Prakash Apte as part-time chairman subject to regulatory approvals.

Apte has been a non-executive independent director of the bank since 2011. Apte has considerable experience in the agricultural sector and was MD at Syngenta India until April 2011, and is the company's non-executive chairman since then.

The bank took a one-time hit of ~930 million due to the increased gratuity limit, excluding which the profit growth would have been in excess of 20 per cent, said executive vice-chairman and MD Uday Kotak