Kotak Bank Q4FY22 Results: Profit beats estimates

Profit increase: The net profit increased 65% on-year to Rs 2,767 crore for the quarter ended March. The net profit in the same period last quarter was Rs 1,682 crore. The profit was higher than street expectations. Analysts had earlier anticipated a profit of about Rs 2,147 crore. 

Net interest income rises: A bank’s primary business is to borrow money and lend the same at a rate higher than the rate at which they borrowed. The income generated from this differential is known as net interest income. Net interest income for Kotak Mahindra Bank grew 18% YoY to Rs 4,521 crore. The Net Interest Margin increased by 16 bps sequentially to 4.78%. Other income stood at Rs 1,697 crore, an increase of 23% over the year.

Asset Quality Improve: The asset quality for Kotak bank improved with gross NPA coming down to 2.34% from 2.71% in the last quarter. The bank also reported an improvement in the net NPA ratio by 15 basis points sequentially to 0.64%.

Credit cost on advances for Q4FY22 was 27 bps (excluding reversal of COVID provision). The provision coverage ratio stood at 73.2%. Total provisions (incl specific, standard, COVID-19 related, etc.) held as of March 31, 2022, were at Rs 6,710 crore. Slippages during the quarter stood at Rs 736 crore, while recoveries and upgrades were at Rs 897 crore.

Deposits and Advances: The Bank’s deposits aggregated to approximately Rs 3.12 lakh crore as of Mar-22, a growth of around 11.3% year-on-year. Bank’s CASA (current and savings account) deposit now comprises 60.7% of the total deposits of the bank, a slight growth sequentially. CASA capital is the cheapest source of capital for banks. The higher the number, the more profit a bank can earn. Advances rose to Rs 2.92 lakh crore, up by 21% YoY in the quarter ended March. 

Update from Subsidiaries: Kotak Securities' profit increased to Rs 252 crore, an increase of 4% yearly. Kotak Mahindra Prime reported a massive increase in profit. It was up by 70.1% and stood at Rs 313 crore. Another subsidiary that reported a massive return is Kotak Mahindra Capital Company reporting 70% growth on year at Rs 42 crore. Kotak Mahindra Life Insurance's profit increased 38% YoY to Rs 267 crore during Q4FY22.

Dividend: The Board of Directors of the Bank has recommended a dividend of Rs 1.10 per equity share having a face value of Rs 5, for the year ended March 31, 2022, subject to the approval of shareholders.

The share price closed at Rs 1,775.90 per share on Wednesday.

Also read on RBI rate hike and its impact here.