At Rs 2,032 crore, net profit exceeded the average Rs 1,860 crore estimated in a Bloomberg survey of 13 analysts. The lender had posted a profit of Rs 2,184 crore in the corresponding period last year.
“Healthy loan growth doesn’t mean we’ve abandoned the conservative approach – it stays,” said Dipak Gupta, deputy managing director of Kotak Mahindra Bank. “We are currently seeing an environment conducive to supporting healthy growth. Until the last quarter, we expected and watched for growth to look good. At this point, it gives us great reassurance to see some opportunities.
Net interest income, or lender’s basic income, grew lukewarm 3% to Rs 4,021 crore for the quarter under review from Rs 3,897 crore a year earlier. Non-interest income saw a sharp increase of 26.5% year-on-year to Rs 1,812 crore, due to commission income.
The net interest margin fell 5 basis points year-on-year – and 15 basis points sequentially – to 4.45%.
One basis point is equal to 0.01%.
“The bank posted healthy operating results with a resumption of business growth, lower provisions boosted profits and asset quality remained stable,” said in a note. “Despite healthy advanced growth, NII’s growth remained subdued due to declining margins.”
The gross bad debt ratio increased 64 basis points from a year ago to 3.19%. It was 2.55% last year due to the asset quality halt authorized by the Supreme Court. Sequentially, the GNPA ratio declined 37 basis points due to an increase in advances.
The bank implemented a total restructuring of Rs 1,262 crore, which represents 0.54% of its total loan portfolio. SMA 2 outstanding, or loans due beyond 60 days, increased from Rs 430 crore in the June quarter to Rs 388 crore during the period under review.
Total provisions and contingencies rose 27% to Rs 424 crore from Rs 333 crore in the same period last year, although these declined sequentially. The bank has maintained provisions worth Rs 1,279 crore for stress related to Covid-19 that is not being used.
The gross slips were Rs 1,293 crore against which the lender had clawbacks and upgrades of Rs 1,350 crore.
Loans increased 14.7% to Rs 2.34 lakh crore while customer assets (loans plus credit substitutes) increased 17%. Strong advances were led by home loans, which climbed 28% year-on-year to Rs 61,479 crore. SME lending also saw robust growth at 23.6%.
“Some difficult areas still remain like the utility vehicle which is not particularly good,” Gupta said. “While all categories of secured loans are booming, we are now looking at the unsecured part as well. ”