Last updated: 26 Oct, 2021 | 02:45 pm
Profit fell - The net profit fell 7% on-year to Rs 2,032 crore for the quarter ended Sep. The net profit in the same period last quarter was Rs 2,184 cr. The profit was however, in line with street expectations. Analysts had earlier anticipated a profit of about Rs 2,006.7 crore. The bank profit fell owing to higher provision. On a sequential basis net profit rose by 24% from Rs 1,642 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 3.2% YoY to Rs 4020.56 crore. The Net Interest Margin contracted 5 bps yearly and 15 bps sequentially to 4.45%. Other income stood at Rs 1,812 crore, an increase of 26.4% over the year.
Kotak Mahindra Bank Q2 results highlights:
Asset Quality Improve - The asset quality for the Kotak bank improved with gross NPA coming down to 3.19% from 3.56% in the last quarter. The bank also reported improvement in the net NPA ratio by 22 basis points sequentially to 1.06%.
The provisions increased to Rs 424 crore, up by 27% year-on-year. The bank has restructured Rs 226.66 crore in the first round of restructuring. The bank disclosed that of the loans restructured in the first round, around 12% or Rs 27 crore had turned into non-performing.
Deposits and Advances: The Bank’s deposits aggregated to approximately Rs 2.92 lakh crore as of Sep-21, a growth of around 11.5% year-on-year. Bank’s CASA (current and savings account) deposit now comprises 60.6% of the total deposits of the bank, up by 32% on year. 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 2.34 lakh crore, up by 15% in the quarter ended Sep 21.
Update from Subsidiaries - Kotak Securities profit increased to Rs 243 crore, an increase of 22.1% yearly. Kotak Mahindra Prime reported a massive increase in profit. It was up by 80.5% and stood at Rs 240 crore. Another subsidiary that reported a massive return is Kotak Mahindra Capital Company reporting 314.3% growth on year at Rs 58 crore. Kotak Mahindra Life Insurance's profit declined 9.4% YoY to Rs 155 crore during Q2FY22.
Kotak Mahindra Bank Q2 results review:
Kotak Mahindra Bank has reported madorate set of numbers in line with street estimates. Its capital adequacy ratio (Basel III) stood at 21.76% from 23.11% last quarter and 22.05% in the same quarter last year. The Bank has not experienced any significant disruptions during the pandemic. NII growth is, however, lower as most of the bank's loan growth came toward the end of the quarter and also saw higher yielding loans 'degrow' year-on-year. This mix change has also affected the NII. The future direct and indirect impact of COVID-19 on the Bank, results of operations, financial position and cash flows remains uncertain and will depend on present as well as future developments, including steps to contain its spread or mitigate its impact.
Going forward, Kotak Mahindra Bank is well positioned to both a healthy growth in topline and bottomline given the upcoming festive season. The company’s subsidiaries have also posted robust performance in their respective segments.