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Sequential growth uptick encouraging… Kotak Mahindra Bank reported a good set of numbers on the operating front with profitability aided by healthy margins and controlled cost. Sequential pick-up in loan book is a positive and was in line with the management’s intent to pedal growth from here on. The bank reported steady NII growth of 16.8% YoY on the back of a sequential improvement in NIM for Q3FY21. NIM improved 6 bps on a sequential basis to 4.58% owing to lower cost of funds. Other income was flattish YoY due to sluggish fee income growth of 3% YoY and lower treasury gain. C/I ratio declined ~790 bps YoY but was up ~380 bps QoQ to 42.3% as promotional, advertisement expenses increased with increasing business activity. The bank made provisions worth | 599 crore, up 62% QoQ, including interest reversal in lieu of stressed assets. PAT, on the back of healthy operating performance, increased 16.1% YoY to | 1853 crore. Headline GNPA and NNPA ratio declined from 2.55% and 0.64% to 2.26% and 0.50% QoQ, respectively. However, proforma based GNPA increased by 54 bps QoQ to 3.24%, while NNPA jumped 50 bps to 1.24%. Restructured book was at 0.28% of advances, still below earlier estimates. Going into next quarter, the management expects marginal restructuring. SMA 2 outstanding increased from | 133 crore to | 654 crore. Outstanding contingent provision was at | 1279 crore (~0.6% of advances).
