Kotak Mahindra Bank posts 5% rise in Q2FY25 net profit at ₹3,344 crore
Kotak Mahindra Bank reported a muted 5 per cent year-on-year (yoy) growth in its second quarter (Q2FY25) standalone net profit at ₹3,344 crore. The bank felt the full impact of RBI’s April 2024 order, which stopped it from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards.
Provisioning due to higher slippages in unsecured personal loans and credit cards weighed on the bank’s bottom line. The private sector lender reported a net profit of ₹3,191 crore in the year-ago quarter.
In the reporting quarter, the bank saw a sequential uptick in bad loans, mainly in the unsecured personal loans and credit cards segment.
Referring to the bank’s latest move to acquire Standard Chartered Bank, India’s personal loan book (total loan outstanding of about ₹4,100 crore as of September 30, 2024), Ashok Vaswani, MD & CEO, emphasised that this is in line with its well-articulated strategy about executing “tuck-in” porfolio acquisitions.
“Apart from scaling personal loans business, this also gives us 95,000 affluent customers, with whom we are hoping to establish a much broader relationship. This is an important “tuck-in” acquisition for us. And we look to do more such transactions going forward,” he said.
Net interest income/NII (difference between interest earned and interest expended) in the reporting quarter was up about 11 per cent yoy at ₹7,020 crore (₹6,297 crore in the year ago period).
Other income, including fee-based income, treasury income and recovery in written-off account, rose about 16 per cent YoY to ₹2,684 crore (₹2,315 crore).
Vaswani said: “This was the first quarter where we saw the full impact of the (RBI’s) tech embargo. But despite that we grew customer deposits by over 16 per cent yoy (to ₹446,110 crore as on September-end 2024) and our CASA (current account, savings account) ratio stabilised at 43.6 per cent (of total deposits vs 48.3 per cent as at Q2FY24)…However, our cost of funds went up by 5 basis points (to 5.15 per cent from 5.10 per cent in Q1FY25).”
The bank grew its customer assets by 18 per cent YoY (to ₹ 450,064 crore), led by wholesale bank and secured advances in the consumer segment, he added.
“We have seen some slowness in the rural aspects of India. And that was reflected in the loans to CVs, tractors, etc. And, of course, we have seen some stress in the microfinance industry as well as some over-leveraging of customers in personal loans and credit cards,” Vaswani said.
Provisions and contingencies (net of recoveries made against loan accounts that have been written off as bad) jumped 80 per cent YoY to ₹660 crore (₹366 crore).
Net interest margin declined to 4.91 per cent from 5.22 per cent a year ago. Devang Gheewala, CFO, said: “We have seen some stress in the unsecured book, mainly credit card business…..Because of the (RBI) embargo, our credit card book is not growing. It has remained stagnant as we are not able to add new cards. Out of the total slippage (of ₹1,875 crore) in Q2, about 30-40 per cent would be from the credit card business.”