Mumbai, May 3 (PTI) Kotak Mahindra Bank on Monday reported a 35 per cent jump in its consolidated net profit for the January-March quarter to Rs 2,589.32 crore on core income growth, and pointed out that lending exposure to the lower end of the spectrum in consumer loans is a challenging segment amid the raging COVID-19 pandemic.

On a standalone basis, the city-headquartered private sector lender reported a 32.82 per cent jump in net profit to Rs 1,682.37 crore for the quarter, while the yearly profit for FY21 rose by 17 per cent to Rs 6,965 crore.

Its net interest income for the reporting quarter moved up to Rs 3,843 crore from the year-ago period's Rs 3,560 crore, on the back of a 1.8 per cent increase in overall loanbook and also narrowing of margins to 4.39 per cent from the 4.72 per cent level in the year-ago period. The non-interest income increased to Rs 1,950 crore.

Its executive vice chairman and managing director Uday Kotak told reporters that the lower end of the spectrum i in consumer loans was a challenging area to operate in, which includes personal loans, credit cards and also micro lending.

Keeping the same in mind, the bank has consciously reduced its exposure to retail unsecured lending over FY21, and it now contributes only 5.8 per cent of the overall book as against 7.5 per cent in the year-ago period.

Uday Kotak said the bank will fly through the clouds over the next few months, and lend only when it feels comfortable to. He said it is very bullish on the home loans space, where it lends against a very strong security of the house, and does not have any plans of hiking its competitive interest rate on the same despite an increase by competition.

He said loan repayments, measured through collection ratios, were stable till the first half of April and some instability has come in only in the second fortnight of the month which saw a zooming up in overall COVID infections across the country and also localised lockdowns.

Its group president Gaurang Shah said the secured book including mortgages, loan against property, and working capital loans up to Rs 10 crore are doing better as of now, and there is a good chance of asset quality continuing to be stable if the COVID curve flattens by June or July.

The share of gross non-performing assets increased to 3.25 per cent on March 31 from the 2.25 per cent level in the year-ago period, as the Supreme Court standstill on not recognizing bad debt got lifted. The bank set aside Rs 1,179 crore as provisions in March quarter, which is more than double of the Rs 418 crore in the quarter-ago period.

It, however, did not dip into the over Rs 1,200 crore of the special COVID provisions that it had done earlier. Loans not paid for between 61-89 days stood at Rs 110 crore, while it has restructured loans of Rs 121 crore under the RBI window, with a bulk of them being personal loans.

There was a reversal of Rs 110 crore on interest on interest income booked earlier.

Uday Kotak seemed to be opposing any moratorium-like decision in view of the second spike in COVID-19, advocating that it should rather be left to the banks to decide whether they wish to restructure some advances after assessing repayment capacity.

The bank's overall capital adequacy stood at 22.36 per cent and it is “clearly open for business” on the inorganic growth front, Uday Kotak said.

When asked specifically about American lender Citi's plans of winding down its consumer banking business in India and look for suitors, Uday Kotak said the bank evaluates “everything”.

He said it may take it long to narrow down on a call, and termed its approach as one of being patient and thorough in deal making.

Share of the low-cost current and saving account deposits stood at over 60 per cent as of March 31, possibly one of the highest in the system.

A majority of the subsidiaries did well and are now contributing over 35 per cent of the profits for the group.

Uday Kotak said there are no plans to take any of the unlisted subsidiaries public as all of them are well capitalized.

The Kotak Mahindra Bank scrip closed 1.39 per cent down at Rs 1,724.30 apiece on the BSE on Monday after the announcement of results, as against a correction of 0.13 per cent on the benchmark.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)