Kotak Mahindra Bank Reports 79% Profit Surge in June Quarter

Kotak Mahindra Bank saw a consolidated net profit increase of 79% to Rs 7,448 crore in the June quarter, driven by a stake sale in its general insurance arm and subsidiary performances. The bank faced RBI-imposed tech-related business restrictions, impacting its standalone profit growth, customer additions, and credit card business.

Kotak Mahindra Bank on Saturday reported a 79 per cent jump in its consolidated net profit in the June quarter to Rs 7,448 crore compared to the year-ago period, majorly helped by a stake sale in its general insurance arm and the performance of subsidiaries.

On a standalone level, the private sector lender's net profit grew by 2 per cent to Rs 3,520 crore, and the management conceded that the business restrictions imposed by the RBI due to shortcomings on the technology front had an impact.

Its chief executive and managing director Ashok Vaswani said the bank has made 'significant progress' on the technology front during the quarter and has also appointed consultancy firm GT Bharat as an external auditor to assess its systems. The IT team has been strengthened with resources from tech giants like Accenture, Infosys, Oracle, and Cisco, though the lifting of restrictions depends on the RBI.

The credit card business has also suffered because of the RBI restrictions, showing asset quality issues starkly as new customer additions were limited to 6 lakh only during the quarter, due to early imposition of the RBI order. Digital onboarding restrictions led to a muted response for its flagship offering '811', but focus shifted to deepening relationships with existing clients.

On unsecured lending, Kotak Mahindra Bank witnessed stress in the lower ticket size, new to credit customer segment and due to over-leverage in the credit card and personal loan segments. Vaswani stated the bank is working carefully with customers to restore their financial health, while still aiming to grow its unsecured loan book.

Core net interest income rose by 10 per cent year-on-year to Rs 6,842 crore, but deposits were hampered by difficulties in new customer additions. The net interest margin declined to 5.02 per cent from 5.28 per cent in March. Fresh slippages stood at Rs 1,358 crore with a stable gross non-performing assets ratio of 1.39 per cent.

(With inputs from agencies.)