Private lender Kotak Mahindra Bank on Wednesday reported a 65% rise in its own profit after tax to £2,767 billion for the quarter to March, helped by higher net interest income growth and healthy asset quality.
For the full fiscal year 2021-22, PAT increased by 23% to ₹8,573 crore.
“If you look at our Q4 numbers, our slippages were extremely under control. On an annual basis, our slippage ratio is 1.08%. Indeed, our slippage ratio now shows that the quality of our loan book is extremely resilient following the COVID exit,” the bank’s Managing Director and CEO, Uday Kotak, told reporters.
Consolidated PAT for the fourth quarter of FY22 was ₹3,892 billion, an increase of 50% from ₹2,589 billion in the fourth quarter of FY21. For full FY22, consolidated PAT increased from €9,990 billion in FY21 to €12,089 billion.
Kotak said the company’s earnings are really broad-based and not overly dependent on just the bank.
Net interest income (NII) increased 18% in the fourth quarter to ₹4,521 billion from ₹3,843 billion.
Kotak said the bank’s NIM (net interest margin) has always been high because the mix of retail is higher in the loan book than wholesale.
He said the bank has a CASA (Current Account Savings Account) ratio of over 60%, which has a significant positive impact on funding costs.
“We are entering the new world of rising interest rates with a very high checking to savings account ratio. If 60% of my deposit is CASA, that’s a very stable cost to the fund base. I’ve always believed in these low costs and a stable liability franchise is at the core of sustainable banking,” he said.
The net interest margin for Q4 FY22 was 4.78%.
Gross non-performing assets (GNPA) improved to 2.34% from 3.25%. The net NPA was 0.64% versus 1.21%.
Credit cost on advances for the fourth quarter of fiscal 22 was 27 basis points (annualized), excluding the release of COVID provisions.
The pension coverage ratio was 73.2%.
Total provisions (including specific, standard, COVID-related, etc.) held as at 31 March 2022 amounted to ₹6,710 crore.
As of March 31, 2022, the bank’s equity ratio according to Basel III was 22.7% and the core capital ratio was 21.7%.
Advances increased by 21% to ₹2,71,254 crore as at 31 March 2022 from ₹2,23,670 crore a year ago. Advance payments increased by 7.2% (not annualized) in Q4 FY22.
Kotak said the bank’s fourth-quarter loan growth was about 29%, plus annualized and 7.3% for the quarter.
“We have the accelerator for credit growth. What is positive for us is that the majority of our book has a variable interest rate. So the ability to transmit interest rates when the central bank rises is intrinsic to our loan book. Our growth momentum continues Loans will continue. We have very good risk management, not only in terms of credit quality, but also in terms of asset-liability matching and funding costs,” he said.
On the impact of the RBI’s announced rate hike, he said rate hikes have an impact, but the 40 basis point rate hike will not change or make a dramatic difference.
The bank’s scrip closed at £1,776.95 a share, up 0.17%.
Meanwhile, the Bank also approved the appointment of Shanti Ekambaram as a full-time Director of the Bank for a three-year term effective November 1, 2022 or from the date of regulatory approvals, whichever is later.
The bank also announced the reappointment of KV S. Manian as a full-time director for a three-year term (after expiration of his current term on October 31, 2022) effective November 1, 2022 or from the date of regulatory approvals, whichever is later.
The Bank has accepted Gaurang Shah’s request to step down as full-time Director and Director of the Bank upon the expiration of his current term, which ends on October 31, 2022.
Mr. Shah will remain a director of Kotak Mahindra Asset Management Company, Kotak Mahindra Life Insurance, Kotak Mahindra General Insurance, Kotak Investment Advisors, Kotak Mahindra (UK), Kotak Mahindra Inc. and Kotak Mahindra Asset Management (Singapore) Pte.
