Kotak Bank – Consistency

Kotak Mahindra Bank Limited is an Indian banking and financial services company which has their headquarters in Mumbai. They provide banking products and financial services for corporate and retail customers in the terms of personal finance, investment banking, life insurance, and wealth management. The bank is India’s third largest private sector bank by market capitalisation. As of February 2021, the bank has 1600 branches and 2519 ATMs.

Quarterly Earnings Walkthrough

Kotak Mahindra Bank beats street estimates in terms of profitability during December 2022 quarter. The bank garnered a standalone net profit of ₹2,791.88 crore in Q3 of the current fiscal FY23 compared to ₹2,131 .36 crore a year ago same quarter, registering a growth of a whopping 30.99% year-on-year. Kotak’s asset quality improved with gross NPA declining sharply, however, provisions increased during the quarter.

However, Q3 PAT scaled up by 8.17% from the profit of ₹2,581 crore that was recorded in the September 2022 quarter.

Net interest income (NII) which is the difference between interest earned and interest expended, came in at ₹5,653 crore in Q3 of FY23. The latest quarter’s NII climbed by 30.43% from ₹4,334 crore in Q3FY22 and was up by 10.86% from ₹5,099 crore in Q2FY23.

Net interest margin (NIM) expanded to 5.47% in Q3FY23 from 4.62% in the year-ago same period.

Noteworthily, the bank witnessed an upside in its provisions and contingencies which came in at ₹148.83 crore in Q3FY23 compared to a provisions loss of ₹131 .74 crore in Q3FY22. Also, it was up from provisions of ₹137 crore in Q2FY23.

On the contrary, asset quality continued to improve significantly with gross non-performing assets (NPA) coming under 2% in the current quarter.

In Q3FY23, in percentage terms, Kotak posted a gross NPA that stood at 1.90% — contracting by 81 bps from 2.71% in Q3FY22 and down by 18 bps from 2.08% in Q2FY23.

Also, net NPA dipped steeply to 0.43% in Q3FY23 versus 0.79% in Q3FY22 and 0.55% in Q2FY23.

In value terms as well the asset quality bettered in Q3FY23. The gross NPA stood at ₹5,994.57 crore as of December 31, 2022, compared to ₹6,982.80 crore and ₹6,210.23 crore in Q3FY22 and Q2FY23.

Kotak’s total advances climbed by 23% YoY and 6% QoQ to ₹310,734 crore as of December 31, 2022. Under the advances, the bank posted 29% YoY growth in home loans & loans against property to the tune of ₹89,112 crore, while credit cards came in at ₹9,159 crore rising by a whopping 85% YoY. Loans for PL, BL, and Consumer Durables climbed by 69% YoY to ₹14,542 crore. On the other hand, SME loans picked up by 25% YoY to ₹23,154 crore among others.

Meanwhile, total deposits were at ₹344,666 crore up by 12.89% YoY and 5.98% QoQ. Customers’ assets came in at ₹339,313 crore versus ₹274,569 crore in Q3FY23. CASA ratio stood at 53.3% versus 59.9% in Q3FY22.

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