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Kotak Mahindra Bank goes slow on lending while deposits spike, posts net profit of ₹1,853.5 crore in Q3FY21

Kotak Mahindra Bank

Kotak Mahindra Bank reported a net profit of ₹1,853.5 crore for the third quarter of the current financial, up by 16% year-on-year from ₹1,944 crore in same quarter in the previous year. While the bank has scaled back its lending operations over the last year due to COVID-19 disruptions, its deposit base has grown over the last year, it said in its financial statements.

During a media earnings call, the banks management said that the number of special-mention-account had surged loans due to the  recognition of moratorium loans. “We feel comfortable enough to move the foot to acceleration in the secured retail lending space. We are also looking at good lending opportunities in the corporate and small business space. We will continue to remain slow in the retail unsecured segment,” said Dipak Gupta, joint managing director, Kotak Mahindra Bank.

Digital banking performance

  • Mobile Banking: Transaction volumes up by 73% YoY, transaction value up 40% YoY
  • Internet Banking: 93% increase in leads and 47% increase in site visits for personal loans
  • Deposits: 97% of recurring deposits and 84% fixed deposits booked through digital channels
  • Loans: 200% QoQ growth in home loan sourcing  and 400% QoQ growth in personal loan sourcing
  • Credit cards: 300% YoY growth in credit card sourcing and 73% of all credit cards booked through digital channels
  • UPI: 2.3x QoQ growth in consumer digital payments and 11x QoQ growth in acquiring transactions

Operational highlights

Total advances of the bank declined marginally a little over ₹2.14 lakh crore in Q3FY21 from around ₹2.16 lakh crore in Q3FY20, as the bank scaled back fresh loan disbursement to specific sectors. The corporate lending book came down by 35% YoY to ₹59,875 crore in Q3FY21 from ₹62,495 crore in Q3FY20, while the small-medium-enterprise portfolio has reduced by 10.6% YoY to ₹18,702 crore in Q3FY21 from ₹20,928 crore in Q3FY20.

While the home loan portfolio grew by 5% YoY to ₹49,977 crore and the consumer banking book grew by 3% YoY to ₹20,548 crore as of Q3FY21, total advances towards personal loans fell by by 23.4% YoY to ₹7,528 crore and credit cards fell by 6.7% YoY to ₹4,557 crore.

The banks’ deposit base grew by 10.8% to ₹2.65 lakh crore in Q3FY21 from ₹2.39 lakh crore in Q3Fy20. The banks’ current-account and savings account ratio has improved to 58.9% of its deposit base in Q3FY21 from 53.7% in Q3FY20. Around 92% of its deposit base comprises of CASA and term deposits below ₹5 crore. Over the past year, the majority of the deposit growth came from savings accounts. As of December 31, 2020 the bank had over ₹2.01 lakh crore in savings deposits compared to ₹83,000 crore in the previous year.

The banks’ gross NPA (GNPA) ratio declined to 2.26% in Q3FY21 from 2.55% in Q2FY21 and 2.46% in Q3FY20. Its net NPA (NNPA) ratio declined to 0.5% in Q3FY21 from 0.64% in Q2FY21 and 0.89% in Q3FY20. However, if not for the Supreme Court interim order last year which directed banks to not classify any NPA accounts after August 31, 2020, on a proforma basis the banks’ GNPA ratio would by 3.27% and NNPA 1.24% as of December 31, 2020, it said. The bank has made ₹1,279 crore worth of COVID-19 related provisions.

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The bank has restructured around ₹600 crore worth of loans or 0.28% of net advances, between October and December. Recoveries in the proforma accounts have been slow, which is why the bank made higher provisions against these accounts, said Jaimin Bhatt, group president and group chief financial officer, Kotak Mahindra Bank.

Financial Snapshot

  • Net Interest Income: ₹4,007 crore, up by 17% YoY and 2.4% QoQ
  • Net Interest Margin: 4.51% in Q3FY21 vs 4.69% in Q3FY20
  • Operating Expenses: ₹2,258 crore, down by 5% YoY and up by 10.5% QoQ
  • Operating profit: ₹3,083 crore, up by29% YoY and 49% QoQ

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