Kotak Mahindra Bank Q3 results: Profit and net interest income jump over 30% to beat Street estimates

Kotak Mahindra Bank reported its quarterly earnings on Saturday for the October to December 2022 period in which its profit rose to Rs 2,791.9 crore, beating the CNBC-TV18 poll projection that pegged the figure at Rs 2,682.9 crore. In the same quarter last fiscal, its profit stood at Rs 2131.4 crore, implying a 31 percent increase in this quarter.

The lender’s net interest income for the three month period also surpassed estimated by 6.1 percent and came in at Rs 5,652.9 crore against the poll estimate of Rs 5,330 crore. In the corresponding quarter in FY22, the bank had registered a net interest income of Rs 4334.3 crore.

Kotak Mahindra Bank's total income increased to Rs 11,099 crore in the latest December quarter from Rs 8,260 crore in the year-ago period, the bank said in a regulatory filing. The net interest margin (NIM) rose to 5.47 percent during the quarter, up from 4.62 percent in the year ago period.

The lender's asset improved with gross NPAs (non-performing assets) declining to 1.90 percent as compared to 2.71 percent at the end of third quarter of previous fiscal. Net NPAs eased to 0.43 percent as against 0.79 per cent in the same period a year ago.

The capital adequacy ratio declined to 19.66 percent in the December quarter as against 21.29 per cent.

A lower CASA ratio indicates a higher cost of funds, because banks do not usually give any interests on current account deposits and the interest on saving accounts is usually very low.

During the quarter under review, the lender’s slippages — bank's loans that become NPAs on account of the borrower not paying interest for over 90 days — came down to Rs 748 crore from Rs 983 crore in the year ago period. Of Rs 748 crore, Rs 171 cr got upgraded within Q3FY23, the bank said in a regulatory filing.

Reflecting on digital adoption, Kotak Mahindra Bank said that over 98 percent of savings account transaction volumes were in digital or non-branch modes in Q3FY23 over Q3FY22.