Kotak Bank’s Q1 profit declines 8.5%

nMUMBAI: Private lender Kotak Mahindra Bank Ltd on Monday reported an 8.5% drop in net profit in the June quarter to ₹1,244 crore, on the back of higher provisions and a drop in other income.

The bank’s provisions in the June quarter more than trebled from a year ago to ₹962 crore, as it made additional Covid-19 related general provisions of ₹616 crore, taking its total pandemic provisions to ₹1,266 crore as on June 30. At the same time, its non-interest income declined 41% year on year to ₹774 crore. The bank has 9.65% of its loan book under moratorium as on June 30, down from 26% as on April 30.

“The availment of the moratorium has been significantly higher on the retail side compared to that on the corporate side. Within, what we call the wholesale book, there is more availment in the small and medium enterprises (SME) segment,” said Jaimin Bhatt, president & group chief financial officer, Kotak Mahindra Bank. Bhatt said among large corporates, the moratorium numbers are extremely small. The bank’s net interest income (NII), or the difference between interest earned and expended, increased 17.8% y-o-y to ₹3,724 crore. Its net interest margin (NIM), a key measure of profitability, stood at 4.4%, down 32 basis points (bps) from the sequential quarter. Gross NPAS, as a percentage of total advances, stood at 2.7% in the June quarter, up 45 bps sequentially.

According to Dipak Gupta, joint managing director, Kotak Mahindra Bank, there is a set of borrowers who still need some relief from lenders to get a foothold.