Kotak Q4 profit falls 7.57 pc on MFI biz impact

    Mumbai, May 3 (PTI) Kotak Mahindra Bank on Saturday posted a 7.57 per cent decline in consolidated net profit to Rs 4,933 crore for the March quarter of FY2024-25, primarily due to elevated stress in the microlending book.
     The private sector lender's net profit during the reporting quarter on a standalone basis decreased 14 per cent to Rs 3,552 crore from the year-ago period's Rs 4,133 crore.
     The embargo enforced by the Reserve Bank -- the bank came out of the restrictions in February this year -- also had some impact, and the chief executive Ashok Vaswani said it aims to increase the monthly credit card issuances to the pre-embargo level in the next six months.
     The core net interest income of the bank rose 5 per cent to Rs 7,284 crore during the reporting quarter, while the other income grew 7 per cent to Rs 3,182 crore.
     The customer assets were up 13 per cent, while the net interest margin narrowed sharply to 4.97 per cent as against 5.28 per cent in the year-ago period.
     Apart from the impact of the policy rate cuts, the challenges on the MFI book, which got halved to Rs 4,500 crore over the last year, hit the bank's net interest margins.
     Vaswani said the overall share of the unsecured loans -- credit cards and personal loans are the other constituents - has declined to 10.5 per cent of the overall book, and the bank will be working actively to increase the number to its aspiration of 15 per cent.
     He, however, made it clear that the aspirational goal of the share of unsecured loans will not be achieved in FY26.
     Stress in the microlending segment is expected to continue for another one more quarter, after which the bank expects some plateauing, Vaswani said, adding that the personal loans and credit cards segments are not experiencing higher stress now.
     The bank will be aiming for a credit growth of 1.5 to 2 times the nominal GDP growth, Vaswani said, adding that this is the same as it has been expecting in the past.
     Like its peers, Vaswani said Kotak Mahindra Bank will also witness pressure on the NIMs in the short term.
     The bank's overall capital adequacy stood at 22.2 per cent with the core tier-I at a comfortable over 21 per cent.
     Subsidiaries' contribution to the overall group profits increased to 29 per cent as the bank came under pressure due to the setbacks on the MFI book and the restrictions imposed by RBI, Vaswani said.
     Among the subsidiaries, Kotak Mahindra Prime's net grew 34 per cent to Rs 297 crore while the asset management arm reported a 149 per cent jump at Rs 529 crore, helping the overall profits.
     Vaswani said the bank does not have any plan to sell stakes in any of its arms.
     According to an exchange filing by Kotak Mahindra Bank, the bank's total standalone income increased to Rs 16,712 crore in the quarter from Rs 15,285 crore in the same period a year ago.
     During the quarter the bank earned interest income of Rs 13,530 crore as against Rs 12,307 crore in the same period a year ago. Net Interest Income (NII) rose to Rs 7,284 crore, from Rs 6,909 crore in Q4FY24, registering a modest increase of 5 per cent.
    On the asset quality side, the bank witnessed marginal deterioration with gross non-performing assets (NPA) of the total advances rising to 1.42 per cent in the fourth quarter from 1.39 per cent at March-end last year.
    However, net NPAs against net advances moderated a bit to 0.31 per cent in March 2025 against 0.34 per cent same period a year ago.
    On a consolidated basis, Kotak Mahindra Bank's total income also eased to Rs 27,174 crore compared to Rs 27,907 crore in the fourth quarter of the previous fiscal.
    For the entire financial year 2024-25, the bank's profit on a standalone basis rose to Rs 16,450 crore as against Rs 13,782 crore in the previous year.
    "The bank's profit for FY25 increased to Rs 16,450 crore (including gain on divestment of Kotak General Insurance of Rs 2,730 crore) from Rs 13,782 crore in FY24, up 19 per cent YoY. Profit after tax for FY25 excluding gain on divestment of Kotak General Insurance stood at Rs 13,720 crore," it said.

(This story has not been edited by THE WEEK and is auto-generated from PTI)