Last updated: 05 May, 2021 | 05:44 am
Profit below estimates: The net profit grew 35% on-year to Rs 2,589 crore (consolidated) in Q4FY21, however, the profit was below street expectations. Analysts had earlier anticipated a profit of about Rs 2,800 crore. The bank was able to post a higher profit on the back of an increase in fee income.
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 8% YoY to Rs 3,843 crore, against Rs 3,739 crore estimated by analysts (on a standalone basis). On a consolidated basis, NII increased to Rs 5,019 crore.
Asset quality improves: The bank’s asset quality improved with the gross non-performing asset ratio reduced to 3.25% of total advances as against 3.27% in Q4. Net NPA ratio came down slightly to 1.21% from 1.24%. The bank reported provisions and contingencies at Rs 599 crore as of Dec- 20, increasing sharply by 62.5% compared to the previous quarter. The bank has set aside Rs 110 crore from interest earned to refund its borrowers as per the Supreme Court decision in March.
Deposits: The Bank’s deposits aggregated to approximately Rs 2.8 lakh crore as of Mar-21, a growth of around 6.5% year-on-year. Bank’s CASA (current and savings account) deposit now comprises 60.4% of the total deposits of the bank. 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 2.39 lakh crore, a slight increase from Rs 2.29 lakh crore a year earlier.
Dividend: The bank has declared a dividend of Rs 0.90 per share.
Despite the effects of the pandemic, Kotak Mahindra Bank has delivered strong results in the last quarter of FY21. As per the CEO, the bank is focused on providing home loans to its customers. The bank has been able to maintain a healthy deposit and advances growth rate.
The asset quality of the bank has also shown improvement. However, there could be a rise in NPAs if the current pandemic situation prevails for a longer time. Even though the current economic environment is extremely stressful for the Banking industry, Kotak Mahindra Bank has the necessary firepower to tide over these turbulent times.