Private Lender Exceeds Expectations, Demonstrating Strong Financial Strength and Stability
India's Kotak Mahindra Bank has surpassed expectations with a remarkable 67% year-on-year increase in quarterly net profit. The bank's strong performance was supported by higher net interest income and robust loan growth.
In the three months ending on June 30, the Mumbai-based private lender achieved a standalone net profit of 34.52 billion rupees ($421.1 million), exceeding analysts' average estimate of 32.4 billion rupees, according to Refinitiv data. The bank's net interest income, the difference between the interest earned and paid out, also surged by 33% to reach 62.34 billion rupees.
Kotak's net interest margin (NIM) rose to 5.57%, compared to 4.92% in the same period last year, but slightly lower than the 5.75% reported in the previous quarter (January-March). Going forward, the bank's NIM is expected to "moderate" as the cost of funds continues to increase. The joint managing director, Dipak Gupta, stated that margins will eventually return to the "normal" range of 5-5.25%.
During the quarter, Kotak Mahindra Bank experienced a 19% growth in loans and a little over 22% rise in deposits, reflecting strong demand for loans and increased deposit base amid tightened liquidity conditions.
The bank's asset quality remained stable during the quarter, with gross non-performing assets (NPA) ratio at 1.77% at the end of June, slightly improved from 1.78% at the end of March. The net NPA ratio was 0.40% compared to 0.37% at the end of the previous three months.
For the quarter, provisions and contingencies, net of recoveries made against bad loan accounts, amounted to 3.64 billion rupees, with a provision coverage of 78%.
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