Kotak Bank Q4 takeaways: Asset quality improves; subsidiaries shine

Loan growth was slow, both sequentially and annually, while profit growth was at 33 per cent. The lender reported an 8 per cent on-year growth in net interest income at Rs 3,843 crore for the quarter, which was also below analysts’ estimates.

Here are the key takeaways:

Loan growth at 2 per cent
Advances by the bank as on March 31, 2021 were Rs 2,23,689 crore, up 4.5 per cent from Rs 2,14,103 crore as on December 31, 2020. On a YoY basis, the same stood at Rs 2,19,748 crore as on March 31, 2020, a growth of 1.76 per cent.

Rs 435 cr loans restructured
Covid-related provisions as on March 31, 2021 stood at Rs 1,279 crore. In accordance with the resolution framework for Covid-19 and MSME announced by the RBI, as on March 31, 2021, the bank has implemented, for certain eligible borrowers, restructuring of Rs 435 crore (0.19 per cent of net loans).

Asset quality improves
The private sector lender reported a slight improvement in asset quality as gross non-performing assets ratio stood at 3.25 per cent for the quarter compared to 3.27 per cent in the December quarter on a proforma basis. Similarly, net NPA ratio fell to 1.21 per cent from 1.24 per cent a quarter ago. The lender has accounted for all the non-performing loans that were not recognized in previous quarters due to the Supreme Court’s standstill on reporting of bad loans till August 31.

Dividend at 90 paise
The bank after a long time also declared a 90 paise per share dividend. RBI had banned banks and NBFCs to declare any dividend in order to preserve capital in face of the pandemic. Capital adequacy ratio of the bank as per Basel III, as on March 31, 2021, was a robust 22.3 per cent and Tier I ratio was 21.4 per cent.

Subsidiaries contribute 30% of PAT
For FY21, the bank’s contribution to the consolidated PAT was Rs 6,965 crore out of Rs 9,990 crore. Net contribution of the subsidiaries and associates was 30% of the consolidated PAT.