Kotak Bank reported a 29% rise in Q2 profit to 42.11 billion rupees, beating analyst estimates. The lender saw strong loan growth of 25% and deposits grew 23% during the quarter. While net interest margins fell to 4.31%, the bank’s asset quality improved as bad loan provisions dropped by 15%.
The country’s third-largest private lender by market capitalisation posted a stand-alone net profit of 42.11 billion Indian rupees ($443.5 million) for the three months ended September, up from 32.53 billion rupees for the same period last year.
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Analysts had expected a profit of 41.04 billion rupees, according to data compiled by LSEG.
Indian banks experienced strong loan growth during the financial second quarter across both corporate and retail segments, with lending against foreign-currency non-resident deposits also contributing to growth.
In June, the Reserve Bank of India introduced measures, including concessional hedging facilities and swap arrangements, to attract foreign currency deposits.
Kotak Bank's net interest income rose 16% to 84.6 billion rupees, aided by a 25% rise in domestic loans. Deposits grew 23%.
Its net interest margin, a key measure of the bank's profitability, fell to 4.31% from 4.53% three months earlier on account of FCNR deposit mobilisation during the quarter.
Funds kept aside for potential bad loans and other losses fell 15% to 8.04 billion rupees.
The bank's other income, which includes income from bonds and other investments, rose 23% year on year to 31.94 billion rupees amid volatile currency and debt markets.
The Mumbai-based lender's asset quality improved marginally, with the gross non-performing asset ratio at 1.04% at the end of September, compared with 1.18% in the prior three months.