Kotak Mahindra Bank’s Q1 net profit up 42%; i-banking, alternative assets unit see earnings pressure
Private sector lender Kotak Mahindra Bank reported nearly 42 per cent growth in consolidated net profit at Rs 627 crore for the first quarter ended June 30, 2013, over the year-ago period, led by its core banking business.
The growth was led by marginally higher net interest income of the bank, which rose to 4.8 per cent as against 4.7 per cent in Q1 FY13, coupled with 20 per cent rise in consolidated advances. In addition, earning was boosted by profits from motor finance and life insurance while growth in other income nearly doubled for the bank.
Net interest income (NII) grew 25 per cent to Rs 1,374 crore during the three-month period.
“We are expecting the net interest margin (NIM) to continue at the same level for the whole year. We will be opening around 100 more branches across the country in the next nine months,” the bank said.
Among subsidiaries, Kotak Mahindra Prime reported the highest growth of 94 per cent year on year at Rs 117 crore in its June quarter net profit.
At a standalone level, the bank’s NII grew 27 per cent to Rs 917 crore YoY while other income almost doubled to Rs 462 crore.
The firm’s international subsidiaries continue to weigh on its consolidated earnings, which saw a loss of Rs 10 crore in the reporting quarter.
During the reporting quarter, the bank saw its loan take-off grow 19 per cent YoY to Rs 50,539 crore. Loans to corporate and mortgage loans continue to be the largest contributors to its overall loan portfolio.
The gross non-performing asset (NPA) ratio rose to 1.95 per cent from 1.6 per cent in the corresponding quarter of the previous year. Net NPA ratio stood at 0.98 per cent, as against 0.8 per cent a year ago.
The bank’s other income, which majorly contributed to its total income, was led by the uptick in fees and treasury income. The income from treasury operations more than tripled to Rs 164 crore.
Provisions and contingencies shot up five times – from Rs 34 crore to Rs 169 crore YoY.
Its deposits grew 26 per cent to around Rs 52,500 crore while savings deposits expanded at a faster pace by 45 per cent to about Rs 8,050 crore.
Recently, the Reserve Bank of India had penalised the lender a sum of Rs 1.5 crore for violating Know Your Customer (KYC) norms.
Kotak Mahindra Capital Co
The i-banking arm saw the income marginally down at Rs 22 crore against Rs 23 crore in Q1 of FY13 and net profit down to Rs 4 crore as against Rs 6 crore in the year-ago period.
The largest transactions by the i-banking arm included the global alliance between Mahindra Group & CIE Automotive, Spain, for auto components business and associated open offers for Mahindra Forgings Ltd and Mahindra Composites Ltd with transaction size of Rs 5,178 crore.
The firm also worked on the Institutional Placement Programme (IIP) for Mahindra Holidays & Resorts, DLF and Puravankara (also offer for sale).
It also mediated the private equity deal involving its parent where Singapore’s sovereign wealth fund GIC picked up 2.6 per cent of Kotak Mahindra Bank for Rs 1,296 crore.
Shares of Kotak Mahindra Bank were up 0.05 per cent to Rs 710.6 on the Bombay Stock Exchange on Thursday in a strong Mumbai market.
Kotak Investment Advisors
The alternative assets management arm, with around Rs 5,092 crore in corpus in real estate, private equity and infra funds, also saw pressure on the bottom line. While income was flat at Rs 22 crore, the net profit shrank to Rs 1 crore, as against Rs 8 crore in Q1 FY12-13.
(Edited by Sanghamitra Mandal)