Kotak's First-quarter Profit Lags Estimates As Provisions Surge
Kotak's stock rallied close to 30 percent in the June quarter, outperforming the NSE stock index and the Nifty Private Bank index
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India's Kotak Mahindra Bank Ltd posted a smaller-than-expected 12.3 percent rise in fiscal first-quarter net profit on higher provisions for treasury losses even as its bad loan ratio improved.
The lender, which is India's second-largest bank by market capitalisation and led by Asia's richest banker Uday Kotak, said on Thursday net profit was Rs 10.25 billion ($148.84 million) in the three months ended June 30, compared with Rs 9.13 billion a year ago.
That fell short of analysts' expectations of Rs 11.67 billion.
Total provisions more than doubled to Rs 4.70 billion from Rs 2.04 billion a year ago, as the Mumbai-based lender said it did not avail a central bank dispensation of spreading mark-to-market losses over four quarters.
The bank's shares, valued at more than $37 billion, fell as much as 4.6 per cent to a more than two-week low after the results, and were down 4.2 per cent at 0822 GMT.
Loans at end-June grew 24 per cent from a year earlier, while net interest income rose 15 per cent. Net interest margin came in at 4.3 per cent.
Private sector banks such as Kotak have expanded loans at a faster pace as record levels of bad loans have constrained the dominant state-backed lenders in Asia's third-biggest economy. Kotak has also gained from its strong retail presence and relatively smaller exposure to the troubled sectors such as power and infrastructure.
Gross bad loans as a percentage of total loans fell to 2.17 per cent at end-June from 2.22 percent in the preceding quarter and 2.58 per cent a year ago.
Kotak's stock rallied close to 30 percent in the June quarter, outperforming the NSE stock index and the Nifty Private Bank index.
Earlier in the day, Kotak's smaller rival RBL Bank Ltd posted an about 35 per cent jump in quarterly profit, buoyed by higher interest income even as its bad loan ratio remained unchanged at 1.40 per cent at the end of June.