Kotak Mahindra Bank Q4 consolidated net rises 17.3% to Rs 4,566 crore

Kotak Mahindra Bank reported a 17.3 per cent year-on-year growth in consolidated net profit to Rs. 4,566.4 crore in Q4-March (Q4) FY23, on the back of strong growth in margins.

The bank recorded a consolidated net profit of Rs. 3,891.8 crore in the same period last year. On a full year basis (FY23), consolidated net profit increased by 23% to Rs.14,925 crore as compared to Rs.12,089 crore for the previous year.

On a standalone basis, the bank’s net profit increased by 26 per cent YoY to Rs. 3,496 crore in Q4 FY23. For FY23, it increased by 28 per cent YoY to Rs. 10,939 crore.

The Board of Directors has recommended a dividend of Rs 1.50 per share (at a nominal value of Rs 5 per share) for the financial year 23, subject to the approval of the shareholders.

Commenting on the factors contributing to the healthy earnings, Uday Kotak, the bank’s managing director and chief executive officer, said the cost of credit was at an all-time low of 22 basis points. Net interest margin (NIM) increased to 5.75 percent in Q4FY23 (from 4.78% in Q4FY22), reflecting the focus on risk-adjusted returns.

Kotak said that the financial sector around the world is going through a difficult period.

“This is a time when financial stability should be a primary goal for the bank,” he said.

Net Interest Income (NII), the difference between interest earned and interest disbursed, grew by 35% year-on-year to Rs.6,103 crore in the January-March period as against Rs.4,521 crore over the same period in the previous financial year. Net Interest Margin (NIM) was 5.33 percent for FY23 and 5.75 percent for the fourth quarter of FY23.

Jaimeen Bhatt, Group President and Group Chief Financial Officer, said NIMs will continue to rise in FY24.

Fee and service income for the fourth quarter expanded by 22% year-on-year to Rs.1,928 crore. The private sector lender’s net advance increased by more than 18 percent to 3.20 trillion rupees as of March 31, 2023, from 2.71 trillion rupees on March 31, 2022.

Uday Kotak said the bank could grow on a sustainable basis at 1.5-2 times the nominal growth of the country’s GDP of 11-11.5 percent.

Referring to the growth in corporate credit, KVS Manian, full-time manager said that some pockets are starting to see investment-based borrowing, but there is still no strong capacity and demand creation for credit. He said the company’s book could see 15-20 percent growth.

Deepak Gupta, Joint Managing Director, added that in the retail sector, there is scope to increase the share of unsecured credit to the teens level.

Deposits grew by 16.49 percent year-on-year to reach Rs. 3.63 trillion at the end of March 2023. However, the share of low-cost deposits – current and savings account (CASA) fell to 52.8 percent at the end of March 2023 from 60.7 percent a year earlier.

Manyan said the money moved into term deposits in response to changes in interest rates. “Whatever money should have gone out has been moved. The bank got a license for government business last year. This should start adding savings accounts,” Manian said.

The asset quality profile of the bank improved with total non-performing assets (NPA) declining to 1.78 percent in March 2023 from 2.34 percent in March 2022. Net NPAs also decreased to 0.37 percent in March 2023 from 0.64 percent (a). for a year. The provision coverage ratio reached 79.3% by the end of March 2023.

The capital adequacy ratio, at the standalone level, was 21.8 percent with a joint equity category of 20.6 percent at the end of March 2023.

Kotak added that the capital adequacy is comfortable and has the ability to grow the business both organically and inorganically.

Disclosure: Entities controlled by the Kotak family own a significant stake in Business Standard Pvt Ltd