Kotak Mahindra Bank - Q2FY21 First Cut - ICICI Securities

(CMP - Rs. 1406; MCap - Rs. 278461 crore)

Kotak Mahindra Bank posted a healthy operating performance with largely stable asset quality on standstill asset classification basis. Improved margins, cost control and lower provisions boosted net profit.

Q2FY21 Earnings Summary

- During Q2FY21, Kotak Mahindra Bank reported steady NII growth of 16.8% YoY on the back of improved net interest margin. NIM improved by 12 bps on a sequential basis to 4.52% on the back of lower cost of funds, CoF(calculated) declined by 36 bps on a sequential basis to 3.82%. Other income also reported a respectable growth of 18.6% YoY but fee income saw a reduction of 8.8% YoY, which can be attributed to sluggish business growth. Cost to income ratio declined considerably by 32 bps QoQ and 67 bps YoY to 38.5%. The bank during the quarter made provisions worth Rs. 368 crore which included Rs. 13 crore general provisions for Covid-19 deferral cases. Net profit for the quarter thus on the back of healthy operating performance increased by 26.7% YoY to Rs. 2184 crore

- Asset quality during Q2FY21 improved on a sequential basis as GNPA and Net NPA ratio for the quarter declined by 15 bps and 23 bps to 2.55% and 0.64%. However on a standstill asset classification basis the asset quality performance would have been largely stable with GNPA and NNPA coming in at 2.70% and 0.74%. Slippages rate improved during the quarter improved as accounts worth Rs. 264 crore slipped into NPA as compared to Rs. 796 crore in the previous quarter. SMA2 outstanding now stands at 0.06% of net advances as compared to 0.2% YoY

- Loan book declined on yearly basis 4.0% as all segments barring home loan and agri finance sowed negative growth. Home loan and Agri finance portfolio book increased by 7.6% and 7.4% YoY. Deposit growth for Q2FY21 stood at 12.2% YoY to Rs. 261563 crore driven by healthy 19.6% YoY uptick in the CASA deposits. Savings deposit growth was healthy at 25.7% YoY which made CASA ratio to come in at 57.1%, up 35 bps YoY

- Consolidated PAT came at Rs. 2946 crore; up 22.4% YoY largely driven by bank's profit. Overall performance of subsidiaries remained healthy with Kotak Life insurance reporting profitability at Rs. 171 crore, up 18.8% YoY. Kotak Securities PAT was healthy at Rs. 199 crore, up 33.6% YoY. Kotak AMC profitability stood at Rs. 84 crore flat on YoY basis. Kotak prime, the non-banking arm, de-grew 22.7% YoY with earnings at Rs. 133 crore

We would be coming out with a detailed report post the conference call.

Shares of KOTAK MAHINDRA BANK LTD. was last trading in BSE at Rs.1415.75 as compared to the previous close of Rs. 1383.05. The total number of shares traded during the day was 284604 in over 17385 trades.

The stock hit an intraday high of Rs. 1428.4 and intraday low of 1347.75. The net turnover during the day was Rs. 395860733.

Source : Equity Bulls

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