Kotak Mahindra Bank has posted a 32 per cent rise in its net profit for the quarter ended March 2016. The private lender has successfully emerged as a profitable bank amid surge in reports of banks marred by high levels of bad loans and provisions.
Notably, most Indian banks are going through a tough phase mainly because of bad loans. Its net profit stood at Rs 695.78 crore as compared with Rs 527.14 crore in a year ago.
Financial analysts opined that the bank will successfully draw massive premiums due to its tightly controlled asset quality and lower credit costs. “The benign credit costs that the bank has guided for FY17 is expected to aid its earnings growth,” Nitin Kumar analyst with Prabhudas Lilladher stated.
“There is a high possibility of bank registering better loan growth in the next fiscal,” Kumar remarked. It is also expected to increase the proportion of retail loans on its books.
Kotak Mahindra had closed the year with a credit cost of 83 basis points is now tending towards a total credit cost of 45-50 bps for 2017 fiscal. It also expects a loan growth of over 20% in the coming year largely on the back of revival in the CV, small business and SME segment. Personal loan, credit card and agri portfolio sectors continue to post excellent growth.
Analysts feel that the completion of integration with erstwhile ING Vysya Bank at the end of June 2016 will lead to significant cost efficiency and branch productivity for Kotak where it currently lags.
Executive Vice Chairman and MD Kotak Mahindra Bank, Uday Kotak said that reporting the numbers on SMA 2 is in the interests of transparency and in order to ensure there is no arbitrage on what’s the fact at least in the case of our bank.