Kotak Bank posts net profit of ₹3,496 crore for Q4 FY23, up by 26% y-o-y

Kotak Mahindra Bank on Saturday recorded a net profit of INR 3,496 crore for the fourth quarter of FY23, up 26 percent year-on-year and 25 percent quarter-on-quarter. For FY23, profit after tax increased by 28 per cent at Rs.10,939 crore.

Net Interest Income (NII) for the quarter increased by 35 per cent YoY and 8 per cent QoQ to Rs.6,103 crore. For the year, NII was higher by 28 per cent at Rs.21,552 crore. The net interest margin (NIM) was 5.75 percent for the quarter and 5.33 percent for fiscal ’23.

In a post-earnings meeting, CFO Jaimin Bhatt said that since the bulk of the loan book is retail, and most of it is related to an offshore benchmark — largely a repo — the bank’s NIM will continue to rise even if the sharpness of future rate outings drops. He pegged NIM for the current fiscal year at levels similar to FY23.

The bank’s net advances increased by 18 per cent on a year-on-year basis to ₹ 3.2 crore on 31st March.

corporate growth

Full-time director KVS Manian said that the demand for corporate credit is not very strong and although there are some pockets, the bank still does not see the creation of capacity and demand for loans arising from this on a secular basis. There is a great deal of irrational pricing in the market. In general, we’ve seen BBB entities get the same rates as AA entities. “

Within retail loans, mortgage loans have seen some degree of stabilization in demand, particularly in the lower-income sector. However, due to price competitiveness, the market remains very high led by continued demand from the luxury and middle-income segments, Shanti Ekambaram said, Group Head – Retail Banking.

Joint MD Dipak Gupta said the unsecured retail portfolio is about 10 percent of total book, and the bank is looking to raise the stake to the “mid-teens” over the next two years. He added that after Covid and restructuring, space is left with better quality for customers, which together with better quality of data and analytics leads to more convenience in payment possibilities.

MD Uday Kotak said that the commercial banking sector also witnessed strong growth in sectors such as trucks, microfinance, tractors and construction equipment.

CASA ratio

The bank’s CASA ratio fell to 52.8% on March 31, from 53.3% in the previous quarter and 60.7% a year ago. Manian said there is healthy growth in the bank’s time deposits while current account deposits are growing reasonably well. However, there is some deterioration in high value savings accounts, with balances over $10 lakh, as customers have shifted to other higher interest bearing instruments.

He said the bank would also look at building its savings deposits from the government business/PSU for which it was awarded the license last year.

The capital adequacy ratio was 21.8%, of which 20.6% was CET1. Bhatt said that since capital burnout in FY23 is less than 1 percent and the bank is making good profits, there are no plans to raise capital at the moment.

Given its strong capital reserves and overall capital levels, the Bank has the capacity and continues to explore opportunities for inorganic growth. “We’re open to small acquisitions, we’re not afraid of big acquisitions…and we’re still hungry,” Kotak said.