Kotak Mahindra Bank Ltd's Q1FY20 standalone net profit rises 32.7% yoy to Rs1,360.20cr : Misses Estimates

The bank’s standalone NII stood at Rs3,173cr, up 22.8% yoy

July 23, 2019 10:05 IST | India Infoline Research Team

Kotak Mahindra Bank Ltd Q1FY20

Standalone Results Q1FY20: ( cr)

Q1FY20 YoY (%)
NII 3,173 22.8
GNPA (%) 2.2 2
Provisions 316.76 [32.6]
Net Profit (adjusted) 1,360.20 32.7
***GNPA change is in bps on qoq basis

Kotak Mahindra Bank’s (KMB) Q1FY20 standalone NII has improved by 22.8% yoy to Rs3,173cr against Rs2,583cr in the corresponding quarter previous year. The bank’s standalone net profit was slightly below consensus estimates, which has improved by 32.7% yoy to Rs1,360cr against Rs1,025cr in Q1FY19. Its GNPA for Q1FY20 came at 2.19% against 2.14% qoq, which has increased by 5bps. NNPA for the quarter came at 0.73% against 0.75% qoq, which has decreased by 2bps.

  • Margins expanded 21bps yoy due to a higher yoy increase in yield on advances (34bps yoy - calculated) aided by re-pricing of MCLR-linked loans, while cost of funds declined 6bps yoy, aided by an improvement in CASA ratio and deposit rate cuts in SA deposits. Consequently, NII growth exceeded loan growth.
  • Other income growth was driven by strong growth in life insurance income (+54% yoy), while trading gains declined 9% Yyoyand stood at Rs150cr. Core fee income growth for the bank remained muted as it grew 12% yoy (10% yoy in 4QFY19) and lagged loan growth.
  • Provisions declined yoy driven by lower provisions for investment depreciation (-78% yoy), while provisions for loan losses grew moderately at 10% yoy.
  • Advances as on June 30, 2019 were up 18% to Rs2.08 lakh cr. Growth was especially weak in corporate and business banking, which grew 9% yoy, while auto loans declined 4% yoy. Unsecured retail loan growth was more resilient (+28% yoy). Loan growth for the standalone bank was 18% yoy (21% yoy in 4QFY19).
  • Average Savings deposits grew by 21% to Rs78,654cr for Q1FY20 compared to Rs65,135cr for Q1FY19. Average Current Account deposits grew by 23% to Rs32,679cr for Q1FY20 compared to Rs26,649cr for Q1FY19.
  • CASA ratio as on June 30, 2019 stood at 50.7% compared to 50.3% as on June 30, 2018. TD deposits as on June 30, 2019 were 7% of the total deposits. Cost of SA for Q1FY20 was 5.51%.
  • Capital adequacy ratio of the Bank, as per Basel III, as on June 30, 2019 is 17.8% and Tier I ratio is 17.3%.
  • Consolidated PAT for Q1FY20 increased to Rs1,932cr from Rs1,574cr in Q1FY19 up 23%.
  • Consolidated Advances were Rs2.44 lakh cr as on June 30, 2019.
  • The market share of Kotak Securities in the cash segment was 10% for Q1FY20 (8.3% in Q1FY19).
  • Total assets managed / advised by the Group as on June 30, 2019 were up 19% at Rs2.36 lakh cr.
  • Asset quality deteriorated marginally, as GNPL ratio increased 8bps qoq to 2%. The SMA-2 book increased to Rs332cr and comprised 0.14% of loans (0.06% of loans in 4QFY19). Slippages (consolidated) decreased to Rs890cr (Rs990cr in 4QFY19), however remained relatively elevated. Slippage ratio therefore decreased to 1.7% of opening loans (annualised) vs. 1.9% in 4QFY19.

Technical View:

Kotak Mahindra Bank Ltd ended at Rs. 1,453.65, down by 41 points or 2.74% from its previous closing of Rs. 1,494.65 on the BSE.
The scrip opened at Rs. 1,500 and touched a high and low of Rs. 1,500 and Rs. 1,442 respectively. A total of 35,51,607 (NSE+BSE) shares were traded on the counter. The stock traded above its 50 DMA.

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