Kotak Mahindra Bank Net Up 23% in Q1, Will Tread Cautiously in FY20

Mumbai, Jul 22 (PTI) Kotak Mahindra Bank Monday posted a 23 per cent rise in its June quarter net at Rs 1,932 crore on overall growth, but pointed towards cautious stance going ahead because of economic headwinds.

The private sector lender reported a 33 per cent rise in profit after tax at Rs 1,360 crore on a standalone, aided by a 23 per cent growth in core interest income.

Its net interest income grew 23 per cent to Rs 3,173 crore on a 18 per cent growth in advances and net interest margin expanding to 4.49 per cent.

The loan book was, however, flat when compared to the previous quarter.

The bank's joint managing director Dipak Gupta conceded that it has been a "muted" first quarter but expected the growth to pick up to about 20 per cent for the fiscal year driven by consumer loans.

He said auto loans de-grew during the quarter as the bank has been keeping off from the segment due to the dip in sales. Vehicle loan performance has been unaffected because people's income streams are supporting repayments, he said, warning that there can be a big hole in case of job losses.

Corporate loans grew by only 7.8 per cent when compared to the year-ago period because of troubles with sluggish investment activity and the growth is expected to be the same for the remainder fiscal, Gupta said.

The small business segment continues to be a trouble from an asset quality perspective and the bank is slow on the same, he said, adding that the loan book growth will be between 10-20 per cent.

The consumer loan segment will be the largest contributor for the loan growth in the fiscal, he said, adding that the bank is wary about auto loans, loans against property and will stick to set limits on the unsecured side.

The bank had slippages of Rs 750 crore as compared to the Rs 900 crore in the preceding quarter, its chief financial officer Jaimin Bhat said, adding they are across segments.

Loan accounts overdue for over 60 days were at over Rs 330 crore.

The gross non performing assets ratio was stable at 2.19 per cent as of June and the bank does not expect any change in the credit costs guidance of 0.50-0.60 per cent despite its worries on the economic outlook.

Overall provisions came down to Rs 316.76 crore from the year ago's Rs 469.63 crore, and Bhat explained that it had to set aside larger sum for investment-linked provisions last year.

The bank's capital adequacy stood at 17.80 per cent as of June 30.

The bank scrip closed closed 3.08 per cent down at Rs 1,453.65 a piece on the BSE, as against a 0.80 per cent correction on the benchmark.

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