Kotak Mahindra Bank Q1 results announced!
Last updated: 27 Jul, 2020 | 01:38 pm
- Profit falls, misses estimates: Consolidated profit after tax for Q1FY21 was ₹1,853 crore as compared to ₹1,932 crores in Q1FY20, registering a fall of 4%, standalone profit fell 9% on a YoY basis to ₹1,244 crore. Net Interest Income (NII) for Q1FY21 increased to ₹3,724 crores from ₹3,161 crores in Q1FY20 up 17.8%. Net Interest Margin (NIM) for Q1FY21 was at 4.4%. Fee and services income remained muted because of COVID, it plunged 33% to ₹776 crores. CASA ratio was up at 56.7% from 50.7% a year ago.
- Asset quality deteriorates: The GNPA ratio increased to 2.7% from 2.19% a year ago and from 2.25% in the previous quarter. NNPAs increased to 0.87% from 0.73% a year ago and 0.71% in March,2020.
- COVID related provisions: 'Kotak Mahindra Bank has made an additional COVID 19 related general provision of ₹616 crores in Q1FY21. COVID related provisions as of June 30, 2020, stand at ₹1,266 crore (0.62% of net advances).' Total provisioning towards Advances (including specific, standard, and COVID provisions) is higher than the GNPA of the Bank.
- Moratorium statistics: Loans under Moratorium 2.0 are 9.65% of the loan book as at 30th Jun 2020. This includes 9.15% from Moratorium 1.0. The bank also said that approximately 80% of moratorium 2 book is secured.
- Management outlook: The bank said that “the continued slowdown in economic activities has impacted lending business, fee income generation from the sale of third party products or usage of debit/ credit cards, collection efficiency, etc, this slowdown may impact customer defaults and consequently increase in provisions at the group level. There is a high level of uncertainty regarding the time required for life and business to get normal.'
The bottom line for the current quarter results has been hit by higher provisions in the wake of Covid-19. The picture around asset quality will be clear only when the moratorium ends, the entire banking sector is expected to see a spike in NPA’s. However, Kotak Mahindra Bank has a strong capital position, during the quarter, the Bank raised ₹7,442 cr via QIP, resulting in an increase in Capital Adequacy Ratio to 21.7% from 17.8% a year ago. Tier 1 capital stood at 21.1 as compared to 17.3% a year ago.
Our proprietary VGQM model has a BUY rating on the stock.