Kotak Mahindra Bank’s net profit rose 26% year-on-year (y-o-y) in the March quarter due to a strong growth in its loan book. The private sector bank posted a bottomline of Rs 3,496 crore in the quarter under review, up 25% on a sequential basis. The lender’s net profit beat the Rs 2,898 crore estimated by Bloomberg.

The private lender’s net interest income (NII) increased to Rs 6,103 crore y-o-y—a jump of 35%. Net interest margin (NIM) was 5.33% for FY23 and 5.75% for Q4 FY23. It added 2.2 million customers in the March quarter. Customers as on March 31 stood at 41.2 million compared to 32.7 million in the same period last year.

The bank also announced dividend of Rs 1.50 per equity share having face value of Rs 5 for FY23.

The lender’s gross advances rose 18% y-o-y to Rs 3.2 trillion as on March 31.

The lender’s loan book was lifted by a strong growth in its retail advances.

Specifically, credit cards, personal loans, business loans, consumer durables and retail microfinance segments witnessed the highest growth in the quarter under review.

Personal loans, business loans and consumer durable loans rose 56% y-o-y in the quarter under review. Credit cards rose 81% y-o-y and retail micro finance segment rose 103% y-o-y. Broadly, the bank’s customer assets, which includes advances and credit substitutes, rose 19% y-o-y to Rs 3.5 trillion as on March 31.

The bank’s corporate banking segment rose 1% y-o-y to Rs 70,384 crore. Deposits rose nearly 17% y-o-y to Rs 3.6 trillion as on March 31. Of this, current account deposits rose 8.3% y-o-y to Rs 70,030 crore. Term deposits rose nearly 40% y-o-y to Rs 171,281 crore.

The share of low-cost current account savings account deposits fell to 52.8% as on March 31, from 60.7% a year ago.

The bank’s asset quality continued to improve with gross non-performing asset ratio falling sharply from to 1.78% as on March 31, from 2.34% a year ago. Net non-performing asset ratio improved to 0.37% as on March 31, from 0.64% a year ago.

The bank’s slippages were Rs 823 crore in the March quarter, which is 0.3% of net advances. Of this, assets worth Rs 218 crore were upgraded. At the same time, the bank’s provision coverage ratio improved to 79.3% as on March 31, from 73.2% a year ago. The bank’s capital adequacy ratio stood at 21.8% as on March 31.

“A lot of our book is linked to external benchmarks, which is largely repo. Every time the repo rises we have been able to get the benefit. We have now seen a pause in April. We will continue to see elevated NIMs. The repo rates have risen sharply and even if it comes down, it is unlikely to come down so sharply. Our NIMs should be around 5% in FY24 too,” said chief financial officer Jaimin Bhatt.

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