Mumbai: Private sector Kotak Mahindra Bank Tuesday reported a 37.70 percent jump in consolidated net profit for the three months to March at Rs 913 crore, boosted by a doubling of non-interest income.
The Uday Kotak-led lender, which took over the South- focused ING Vysya Bank last month in a Rs 15,000-crore all stock deal, said its consolidated income rose 29 percent to Rs 6,172.26 crore in the fourth quarter ended March 31.
Core net interest income rose 16 percent to Rs 1,123 crore, but it was the non-interest side which helped drive up the profit for the Kotak Group.
Other income nearly doubled (a full 94%) to Rs 1,018.10 crore on a consolidated basis from the year ago period's Rs 524.70 crore.
On a standalone basis, the bank's net profit shot up 29.4 percent to Rs 527.14 crore from Rs 407.1 crore for the fourth quarter ended March 2014, while total income rose to Rs 3,249.08 crore from Rs 2,552.96 crore a year ago.
For the entire fiscal, consolidated net profit rose 23.5 percent to Rs 3,045.45 crore from Rs 464.99 crore on an income of Rs 21,422.75 crore, up from Rs 17,235.63 crore.
On a standalone basis, net profit for FY15 increased 24.1 percent to Rs 1,865.98 crore from Rs 1,502.52 crore and income improved to Rs 11,748.32 crore from Rs 10,166.83 crore.
Chief Financial Officer Jaimin Bhat said the other income included gains by mutual fund business where buoyancy in the markets has attracted new investors, and other parts of the business like insurance commission, debt capital market fees etc which witnessed healthy volume upticks.
Decline in interest rates helped boost treasury income to Rs 166.31 crore from Rs 27.22 crore a year ago, he said.
Executive Vice-Chairman and Managing Director Uday Kotak said only tractors and construction equipment sectors witnessed some pressure during the fiscal gone by and the bank witnessed healthy performance on all other lines.
The decision to go slow on the construction equipment three years ago has paid off as the fourth largest private lender has been able to maintain asset quality, he said.
Kotak felt the bank is near the bottom in this segment a well as commercial vehicles segment, which had witnessed some issues in the past.
Heavy commercial vehicles finacing will see more pick up, which will be followed by the light CVs, Kotak said.
Kotak Bank registered a credit growth of 25 percent in FY15, which was led by corporate demand that grew 40 percent, while consumer loans expanded 25 percent but commercial loans rose a tepid 8 percent, CFO Bhat said.
Corporate segment now accounts for 40 percent of the loan book and the rest is evenly split between the two others, he said.
Capital adequacy was at a comfortable 17 percent. Bhat said the bank raised Rs 1,000 crore in long-term bond against infrastructure and affordable housing book in FY15.
On the ING Vysya Bank merger, Kotak said a dedicated integration office has been set up and it will take about eight months to complete the process. The wholesale business will be the first to integrate followed by the retail side.
Kotak said the actual portfolio carried by ING Vysya has turned out to be in line with the expectations built during the due-diligence process and there is nothing "dramatic" to worry about.
The bank reported a net interest margin of 4.93 percent in Q4 on a standalone basis, which would go down to 4-4.50 percent post-integration, Kotak said, adding the first integrated results will be announced from the June quarter.
The lender also announced a bonus of one share for every share held which was attributed to the good performance of the Kotak Mahindra Group over the last 30 years and is a gesture to welcome the shareholders of ING Vysya Bank.
Asked if the bank plans to raise capital through a depository receipts issue, Kotak replied in the negative.
Claiming that its deposit accretion in the low-cost CASA account has been one of the highest, growing at over 35 percent annually over the last three years, Kotak said there is no plan to cut 6 percent interest rate for balances of over Rs 1 lakh.
The credit cost, including standard assets provision, unhedged forex exposures provision and provision for bad assets, stood at 0.40 percent in FY15 and Kotak hinted at there being a scope to bring it down further. The bank's gross NPA ratio improved to 1.56 percent from 1.63 percent.
Among the subsidiaries, the asset management company, which has a new CEO in Nilesh Shah, reported a loss of Rs 18 crore during the reporting quarter.
A jump in deal activity helped Kotak Capital get back in the black at Rs 30 crore in Q4 as against a Rs 6-crore loss in the same period last fiscal, while the life insurance arm reported a profit of Rs 76 crore.
The Kotak Bank scrip gained 6.54 percent to close at Rs 1,423.65 a piece on the BSE, whose key index the Sensex lost 0.18 percent.
