MUMBAI: The rising stress in the personal loans, and credit card and microfinance portfolios has roiled the quarterly earnings numbers for Kotak Mahindra Bank.
The fourth largest private sector lender has reported a muted set of numbers with net income inching up a meagre 4.8 per cent to Rs 3,344 crore in the September quarter. The numbers vastly missed the Street view as brokerages were expecting it to log in at least Rs 3,494 crore in net profit.
The management led by chief executive Ashok Vaswani and chief financial officer Devang Gheewalla sounded sanguine about the quarter ahead saying the stress in the personal loan book along with microfinance and credit cards have come as a surprise. They said close to 40 per cent of the new stress is in the credit card book and attributed the same to the RBI bank on onboarding new credit card customers through digital channels as a result of which the book has de-grown in the quarter. So the rise in delinquencies is not proportionate.
The key net interest income came in at Rs 7,019.3 crore which was above the brokerage estimates of Rs 6,977 crore. The bank’s net interest margin continue to moderate and came in at 4.91 per cent down from 5.22 per cent on-year. The bank was able to reduce gross non-performing assets (NPAs) to 1.49 per cent from 1.72 per cent. However net NPAs rose to 0.43 percent from 0.37 percent.
On a consolidated basis, the bank logged a growth of 13 per cent in net profit to Rs 5,044 crore against Rs 4,461 crore.
Vaswani said the quarter saw the full impact of the RBI ban on digital sales, with deposits growing only 16 per cent and loans at 18 per cent. The numbers would have worse had it not been for the better show by the subsidiaries.
On the just-announced purchase of the Rs 4,100 crore personal loan book of the British lender Standard Chartered Bank, Vaswani said this is part of the bank’s growth strategy as the deal will get it as many as 95,000 affluent customers.
On the RBI ban, he further said they are working closely with external auditors and would apprise the regulator on their findings soon.
On the recent draft paper that RBI has sought industry suggestions by November 20, on the banks’ other financial services ventures wherein some are overlapping, he said “I don’t think we will have to shut down any of the subsidiaries, maybe we may have to do it slightly differently.” The bank’s credit subsidiary Kotak Prime has most of its offerings overlapping with that of the bank.