Kotak Mahindra Bank's net profit increased by 35 per cent to Rs 252 crore during the quarter ended June 30, 2011, from Rs 187 crore in the year-ago quarter. The growth in profits was on account of growth in interest income and lower provisions.
There has been a contraction of Net Interest Margins due to higher interest rates and the subsequent rise in cost of funds. But a high capital base and a focus on lending to niche segments which offer better yields helped the bank keep the NIM stable, said Mr Jamin Bhatt, Group Chief Financial Officer, Kotak Mahindra Bank.
Going ahead, the bank would be able to sustain the NIM at around 5 per cent, as all Base Rate changes have happened, said Mr Dipak Gupta, Executive Director, Kotak Mahindra Bank.
Lower provisions, at Rs 22 crore (Rs 56 crore), have also aided the profit growth. In the last 12-15 months, most banks have been making lesser provisions as credit quality has been good, Mr Bhatt said.
Credit growth
A higher part of credit growth has come from the commercial (commercial vehicle, agriculture, capital markets) and wholesale segments (corporate loans). The growth in the retail segment (home loans, car loans, personal loans) has been lower, said Mr Bhatt.
Credit growth for the current financial year would be 25-30 per cent, Mr Gupta said.
The fall in treasury profit was on account of rising interest rates. For the June-ended quarter there was a loss of Rs 9 crore in treasury income, against a profit of Rs 86 crore.
Consolidated figures
On a consolidated basis the net profit increased by 27 per cent to Rs 416 crore (Rs 328 crore).
“The capital market entities have shown subdued growth in profit,” said Mr Gupta.
The net profit for Kotak Securities was at Rs 23 crore (Rs 47crore), Kotak Mahindra Capital Company, Rs 1 crore (Rs 7 crore), and Kotak Mahindra Investments, Rs 3 crore (Rs 7 crore).
Kotak Mahindra Prime, the non-banking finance subsidiary specialising in car loans, posted a profit-after-tax of Rs 94 crore (Rs 76 crore), and Kotak Mahindra Old Mutual Life Insurance posted a net profitof Rs 46 crore, against a loss of Rs 7 crore in the previous corresponding period.
On Thursday, the shares of Kotak Bank on the BSE closed at Rs 475.9, down 2.98 per cent from the previous close.