Kotak Mahindra Bank reported a 17.3 per cent year-on-year (YoY) growth in consolidated net profit to Rs 4,566.4 crore in the January-March quarter (Q4) of FY23, on the back of robust growth in margins.
The bank posted a consolidated net profit of Rs 3,891.8 crore in the same period a year ago. On a full-year basis (FY23), the consolidated net profit was up 23 per cent to Rs 14,925 crore compared to Rs 12,089 crore for the previous year.
On a standalone basis, the bank's net profit rose by 26 per cent YoY to Rs 3,496 crore in Q4FY23. For FY23, it surged by 28 per cent YoY to Rs 10,939 crore.
The Board of Directors recommended a dividend of Rs 1.50 per equity share (of face value of Rs 5 each) for Fy23, subject to the approval of shareholders.
Commenting on factors contributing to a healthy bottomline, Uday Kotak, managing director (MD) and chief executive officer (CEO) of the bank, said, the credit cost was lowest at 22 basis points. The net interest margin (NIM) moved up to 5.75 per cent in Q4FY23 (from 4.78 per cent Q4Fy22), reflecting the focus on risk-adjusted returns.
Kotak said the financial sector around the world is going through a tough period.
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“This is a time when financial stability has to be a core goal of the bank,” he said.
The net interest income (NII), the difference between interest earned and interest expended, grew by 35 per cent year-on-year to Rs 6,103 crore in the January-March period as against Rs 4,521 crore during the same period in the previous financial year. The Net Interest Margin (NIM) was 5.33 per cent for FY23 and 5.75 per cent for Q4FY23.
Jaimin Bhatt, Group President & Group Chief Financial Officer, said the NIMs would continue to remain high in FY24.
Fees and services income for the fourth quarter expanded by 22 per cent year on year to Rs 1,928 crore. The private sector lender’s net advances increased by over 18 per cent to Rs 3.20 trillion as of March 31, 2023, from Rs 2.71 trillion as of March 31, 2022.
Uday Kotak said the bank can grow on a sustainable basis at 1.5-2 times the nominal growth of the country's Gross Domestic Product (GDP) of 11-11.5 per cent.
Referring to growth in corporate credit, KVS Manian, Whole Time Director said some pockets are beginning to see investment-led borrowing, but there is still no very strong capacity creation and credit demand. The corporate book could see growth of 15-20 per cent, he said.
In the retail segment, there is room to increase the share of unsecured credit to the mid-teen level, added Dipak Gupta, Joint Managing Director.
The deposits grew by 16.49 per cent on year to Rs 3.63 trillion at the end of March 2023. However, the share of low-cost deposits – Current Account and Savings Account (CASA) declined to 52.8 per cent at the end of March 2023 from 60.7 per cent a year ago.
Manian said money moved to term deposits in response to changes in interest rates. “Whatever funds that had to go out have flown. Bank got a license for government business last year. This should begin to add to saving accounts,” Manian said.
The asset quality profile of the bank improved with gross non-performing assets (NPA) declining to 1.78 per cent in March 2023 from 2.34 per cent in March 2022. The net NPAs also declined to 0.37 per cent in March 2023 from 0.64 per cent a year ago. The provision Coverage Ratio (CAR) stood at 79.3 per cent at the end of March 2023.
Its capital adequacy ratio, at standalone level, stood at 21.8 per cent with a Common Equity Tier of 20.6 per cent at end of March 2023.
The capital adequacy is comfortable and has the potential to grow business organically and inorganically, Kotak added.
Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd
Kotak Mah. Bank