MUMBAI: Kotak Mahindra Bank, the country’s fourth-largest private sector lender, reported a subdued performance in the December quarter, with net profit rising just 4% year-on-year to Rs 3,446 crore. The muted growth was driven by weak performance across key metrics and a Rs 128 crore impact from the implementation of the new labour code.
On a consolidated basis, the bottom line rose 5% to Rs 4,924 crore, and the bank said close to a third of the total net income is contributed the subsidiaries.
The bank made a pre-tax provision of Rs 128 crore towards the new labour code implementation, which on a post-tax basis is Rs 98 crore, chief executive Ashok Vaswani told reporters in a concall Saturday.
Asset improved during the quarter with gross NPAs coming down to 1.30% from 1.50% and the net NPAs falling to 0.31% from 0.41%. The bank’s, provision coverage ratio stood at 76%.
The key net interest income (NII) which is the difference between interest earned from advances and interest paid on deposits, increased 5% to Rs 7,565 crore as the net interest margin (NIM) declined to 4.54% from 4.93% a year ago but was stable from Q2 when it printed in at 4.54%, said Devang Gheewalla, the group chief financial officer.
Non-interest income increased 8% to Rs 2,549 crore, helping the bottomline.
Operating expenses increased 8% to Rs 5,023 crore which include an estimated incremental cost of Rs 98 crore pursuant to new labour code. Excluding the impact of incremental cost due to new labour code, operating expenses rose 6% to Rs 4,927 crore, Gheewalla said, adding cost to income was 48.3% and excluding the impact of incremental cost pursuant to new labour code it would have been 47.4%.
Total provisions for the quarter came in at Rs 810 crore as against Rs 794 crore a year ago and Rs 947 crore in Q2. Credit cost improved to 0.63% from 0.68% in Q3FY25 and 0.79% in Q2FY26), said Gheewalla.
Net advances increased 16% o Rs 4,80,673 crore, taking the total customer assets, which comprise advances and credit substitutes, to Rs 5,29,455 crore, up 15% on-year.
Total period-end deposits grew to Rs 5,42,638 crore, up 15%. Average total deposits grew to Rs 5,26,025 crore, up 15% of which current deposits were Rs 75,596 crore, up 14%, fixed savings deposits were Rs 1,18,505 crore, up 12% and term deposits were Rs 3,18,070 crore, up 19%. The low-cost Casa ratio stood at 41.3%.
Capital adequacy ratio, under the Basel III, stood 22.6 of which CET1 ratio of 21.5.