Bank Results season: Kotak bank back in the mix with 33% PAT growth

After a long hiatus, Kotak managed to increase its lending book, growing it to INR 39k crores (INR 390.79 bln) or $7.81 bln up 33% from last year even as the NIM contracted but remained a high 4.8%. Also Fee income from Insurance premiums of INR 10.97 bln added to the bottomline’s health and remained the predominant source of NII for the bank and the advances were apparently more in the retail book from growth in CV and Agri portfolios.  Transaction Banking/Trade Finance income of INR 18.08 bln however was consistent across three quarters as the bank ended the year with 50% income from NII and 50% from Insurance and other fee income propositions with a healthy topline growth on the year from INR 109.97 bln to INR 129.37 bln (including gross interest) The bank however reported a 33% – 67% NII:Other Income mix for Q4 (1.05:3.07) Its branch/ATM network is growing respectably in the meantime with 350 branches and 800 ATMs.  For the bank alone the ratio of NII to income is nearly 3:1 most other income coming from subsidiaries. Withinthe bank segments proportion of Corp to Retail income is 5:3

Net interest income would account to INR389 bln for the full year and INR 50.9 bln for the quarter while insurance income has grown the Other income figure in Q4 and is INR 28.91 bln for the year 40% of which of INR 10.96 bln coming from this quarter. Operating Profit for the bank for the quarter after provisions grew to INR 7.51 bln and INR 26.57 bln for the year or nearly $500 mln given the volatile moves in the rupee at the benchmark of INR 50 to the dollar this comes to $530 mln.

 PAT for the year however grew less than 20% even as topline grew the same for the year. Banking operations PAT aapparently has crossed our 30% threshold to 33% growth. Profit from Insurance operations ( OM Life) has doubled to INR 2 bln while Kotak Securities and Kotak Prime remain respectable members of the Family in contribution to Profits. Consolidated PAT for the group has grown to INR 5.28 bn of which INR 3 bln is from the bank 

The bank’s deposits growth has kept pace with the growth in advances with CASA growing to 32% on Deposits of INR 390 bln. 82%of the bank’s PBT is from lending operations. Total Assets are growing it to INR 920 bln while growth seems to have been uneven till here since 2007 when Capital Market Operations contribution was more than 53% of the PBT with a net Na ratio of just 0.49% the bank’s Tier I Capital ratio is a respectable 15.7% allowing for future growth in assets 

The bank will have to grow its Commercial Banking advances from INR 181 bln if it wants to compete with the big banks as it manages its access to Deposits with a 6% savings account proposition which has returned the bank to growth 

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