Kotak Mahindra Bank - Quarterly Results

Let us first look at the top line. Kotak Mahindra Bank reported -3.37% lower total consolidated revenues YoY in the Dec-21 quarter at Rs.14,176 crore. In terms of top line revenues, Kotak Bank saw revenue growth across the retail banking vertical, corporate banking vertical, broking vertical and asset management vertical. Most of its key subsidiaries made a good contribution to growth in top line.

However, treasury gains were lower on a YoY basis on account of higher bond yields impacting debt market returns. The top line was also lower due to losses on sale of investments and investment revaluation in the insurance business. This contrasts to a gain in the Dec-20 quarter. Revenues of Kotak Bank were down -7.6% on a sequential basis, indicating that the momentum may have been under slight pressure.

Let us turn to the operating performance of Kotak Bank. For the Dec-21 quarter, the operating profits as reported in the consolidated accounts were up by 8.26% at Rs.4,293 crore. The growth in the operating profits was driven by Net interest income or NII growing by 12%  in the quarter at Rs.4,334 crore on a YoY basis. The all-important Net interest margins or NIM remained robust and is already the best in class at 4.62%.

Net customer additions were more than double in the quarter at 2.1 million on YoY comparison, showing that the aggression in the customer additions was back after the limitations imposed by the pandemic. The CASA (current and savings accounts) ratio improved by 100 bps at 59.9%, a reason for lower cost of funds. Operating margin or OPM expanded from 27.03% in Dec-20 to 30.28% in Dec-21 quarter for Kotak Bank.

Finally, let us turn to the bottom line. Profit after tax (PAT) for the Dec-21 quarter was up by 30.79% at Rs.3,403 crore. The most important factor in this growth was the turnaround in the provisions for loan losses. There was a COVID provision writeback in the latest quarter as compared to a loan loss provision in the Dec-20 quarter and this shift made a big difference and spurred growth in the bottom line for Kotak Bank.

Gross NPAs were slightly higher at 2.71% for the bank but net NPAs at 0.87% hint at substantial provisions already made. The credit cost on advances stood at just about 0.35% annualized, which is a boost to yields and the reason for the hefty NIMs. Capital adequacy is extremely comfortable at 21.3% and much higher than statutory requirements. PAT margins improved from 17.73% to 24.00% on a YoY basis. Overall it was a good bottom line show.

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