Kotak Mahindra Bank Q4 profit up 64.5% on net interest income growth, write-backs

Private sector lender Kotak Mahindra Bank (KMB) on Wednesday reported a net profit of Rs 2,767 crore in the March quarter of FY22, up 64.5% year-on-year (y-o-y), on the back of strong growth in loans and net interest income (NII), and provision write-backs.

KMB’s NII — the difference between interest earned and interest expended — rose 18% y-o-y to Rs 4,521 crore, and its net interest margin (NIM), a key measure of profitability, rose 16 basis points (bps) sequentially to 4.78%.

Customer assets, which include advances and credit substitutes, stood at Rs 2.92 trillion as on March 31, up 23% y-o-y. Advances as on March 31 were at `2.71 trillion, up 21% y-o-y.

Deposits grew over 11% y-o-y to Rs 3.12 trillion. Average savings account (SA) deposits grew 11% y-o-y and average current account (CA) deposits grew 26% y-o-y. The CASA (current account, savings account) ratio as on March 31, 2022 stood at 60.7%, up from 60.4% as on March 31, 2021.

The bank said that it is classifying provisions net of write-backs of mark-to-market depreciation on investments under other income, from the quarter ended September 2021. As a result, it reversed provisions worth Rs 519.15 crore during Q4FY22 and reported a negative provision of Rs 306 crore, as against provisions of Rs 734 crore in Q4FY21.

KMB’s total provisions stood at Rs 6,710 crore as on March 31, 2022. The bank’s provision coverage ratio (PCR) stood at 73.2% at the end of March.

Under the Covid-resolution framework, the bank had a standard restructured fund-based outstanding of Rs 417 crore, amounting to 0.15% of advances. Under the MSME resolution framework, KMB had standard restructured fund-based outstanding of Rs 788 crore, or 0.29% of advances, as on March 31, 2022.

KMB saw an improvement on the asset quality front in Q4, with the gross non-performing asset (NPA) ratio falling 37 bps sequentially to 2.34%. The net NPA ratio fell 15 bps sequentially to 0.64%.

The capital adequacy ratio of KMB, as per Basel III norms, stood at 22.7%, and the Tier-I ratio was at 21.7% at the end of March. KMB’s shares on the BSE ended 0.07% higher than their previous close, at Rs 1,775 on Wednesday.