Kotak Mahindra Bank surges as Q4 earnings beat estimates
The bank reported a consolidated net profit of Rs 912 crore, up 37.6 per cent, as compared to a net profit of Rs 663 crore in year-ago period.
The bank has also declared a bonus share of one for every share held, it would be for the merged entity where even those who received Kotak shares for their stake in ING Vysya, will also be eligible. In November 2014, Kotak Mahindra Bank had announced the acquisition of the Bengalaru-headquartered bank in an all-stock deal. On the Bombay Stock Exchange the bank scrip ended the day up 6.54% at Rs1423.65 per piece.
``Other income has been robust for the bank as fees and commissions from sale of mutual funds, insurance, syndication, forex transactions and credit card fees and treasury gains,’’ said Uday Kotak, executive vice chairman & managing director, Kotak Mahindra Bank.
Other income jumped 96.2% year-on-year to Rs 668.14 crore, which included non-fund based income such as commission, financial advisory fee and selling of third party products. Net interest income, the difference between interest earned and interest expended, grew by 16.2% to Rs 1,123 crore for the quarter ended March compared to Rs 966.53 crore in the year-ago period.
``The growth of 30% in profitability would not be sustainable,’’ said Ravi Shenoy assistant vice president midcaps research, Motilal Oswal Securities Ltd. ``They would grow faster than the peers as it acquires new customers of ING Vysya Bank which gives them the opportunity to cross sell products,’’ said Shenoy.
The bank has seen a 25% increase in its loan portfolio to Rs66,161 crore. ``The corporate loan book has grown faster than retail loans as we saw demand for working capital loans and transaction banking services,’’ said Kotak. ``There is no demand for project finance but we expect this demand to pick up in the second quarter of the financial year. On the consumer banking side we are seeing demand for home loans, loan against property and business loans,’’ he said.
``The economy is much better place as compared to a year back. Companies would have to be realistic in its expectations,’’ said Kotak.
The net interest margin, a measure of profitability has dipped to 4.8% for the March end 2015 from 4.9% in the corresponding quarter last year. ``The bank expects the net interest margin to hover in the range of 4 to 4.5%,’’ said Kotak.
Provisions for bad loans increased 123.7% sequentially to Rs 66.94 crore during January-March quarter from Rs 29.92 crore in December quarter. The bank had reported provisions writeback of Rs 6.19 crore in the year-ago period.
Asset quality improved as gross non-performing assets (NPA) declined to 1.85% as of March 2015 from 1.98% in the corresponding quarter last year. Net NPA also slipped to 0.92% from 1.08% in the corresponding quarter last year.
``Based on the current book the bank is of the view that the credit cost would be in the range of 30 to 40 basis point. However, this could change as the first quarter would reflect the merged book (Kotak and ING Vysya Bank),’’ said Kotak.