Higher provisioning towards advances and receivables tempered Kotak Mahindra Bank’s standalone profit. The bank said net interest margins could come under pressure going ahead.
The bank reported a 12 per cent increase in net profit at Rs 282 crore in the April-June period against Rs 252 crore in the year-ago period.
Provisioning towards advances and receivables were at Rs 52 crore in the Q1 FY13 against Rs 13 crore in the year-ago period.
Net interest income (difference between interest earned and interest expended) increased by 27 per cent to Rs 721 crore during the quarter as compared with Rs 568 crore in Q1 FY12.
Advances and NPA
Advances grew by 31 per cent mainly in the corporate banking and the commercial segments.
Low cost current and savings bank account (CASA) deposits increased by 34 per cent to Rs 11,054 crore. “Within CASA deposits, savings bank deposits jumped 68 per cent aided by the deregulation in SB deposits by the RBI,” said Mr Dipak Gupta, Joint Managing Director.
Net NPAs during the quarter increased to 0.80 per cent from 0.66 per cent in June quarter last year.
“The NPAs have increased as we don’t believe in restructuring loan accounts,” said Mr Gupta. The provision-coverage ratio on NPAs as on June 30, 2012, was 62.5 per cent.
“However, this is a good time to resolve bad loans,” Mr Gupta said.
“Slippages have largely been in the commercial vehicles and agriculture sectors. “There is some stress in construction and companies associated with the infrastructure sector,” Mr Gupta said.
Net interest margins (NIMs) were lower at 4.7 per cent in the quarter ended June 30, 2012, as against 5 per cent as on June 30, 2011. “We may see some pressure in NIMs in the coming quarter,” Mr Gupta added.
Consolidated results
On a consolidated basis, the private sector bank reported a 6.5 per cent growth in net profit to Rs 443 crore (Rs 416 crore in Q1 FY12). Advances grew by 28 per cent to Rs 57,049 crore.
The group’s subsidiary, Kotak Securities, reported a steady growth in net profit at Rs 23 crore while it declined sequentially by 54 per cent. Kotak Mahindra Prime posted a flat profit growth at Rs 94 crore.
Kotak Mahindra Old Mutual Life Insurance Company’s net profit declined to Rs 32 crore from Rs 46 crore in the June quarter last year.
The bank sees a 20 per cent growth in its loan book, while deposits growth is expected to be more than 20 per cent, said Mr Gupta.
The shares of the private sector bank ended lower by 2.51 per cent to close at Rs 579.25 on the BSE.