Kotak Bank net rises 40% in Mar quarter

KOTAK MAHINDRA Bank on Thursday reported a 40.3 per cent year-on-year (y-o-y) rise in standalone net profit for the quarter ended March to Rs 976.48 crore on the back of a 16.4 per cent y-o-y growth in net interest income (NII) to Rs 2,161 crore.

For full fiscal 2016-17, the bank’s net profit increased to Rs 3,411.50 crore from Rs 2,089.78 crore. Total income in FY17 was Rs 21,176.09 crore, up from Rs 18,996.42 crore a year ago.

Net interest margin (NIM) improved 11 basis points (bps) from the end of December to 4.6 per cent. The bank’s vice-chairman and managing director Uday Kotak said the margins posted in the last two fiscal years is “broadly sustainable”.

Provisions at the bank jumped 33.4 per cent from the year-ago period to Rs 267.37 crore. Asset quality deteriorated simultaneously, with gross nonperforming assets (NPAS) rising 17 bps from the end of December to 2.59 per cent of the loan book and net NPAS up 19 bps sequentially at 1.26 per cent.

Kotak attributed the rise in bad loans partly to the process of recognising stressed assets identified at the time of the lender’s acquisition of ING Vysya Bank in 2015, which stood at 2.5 per cent of the merged entity’s loan book.

“We have completed the full cycle of the stress that we got from our ING acquisition. We have come virtually to the end of the recognition of that stress as of March 31,2017,” said Kotak. “And fortunately for us, we have had no issue of any special reporting based on any regulatory requirement at all.”

At the board of directors meeting held on Thursday, the bank proposed a dividend of Rs 0.60 per share for 2016-17. The bank’s assets size grew to Rs 214,589.96 crore as at the end of March 2017 from Rs 192,259.79 crore in the year-ago period.