India's Kotak Mahindra Bank misses Q3 profit view on higher loan provisions
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India's Kotak Mahindra Bank reported lower-than-expected third-quarter net profit on Saturday, weighed down by higher bad loan provisions and shrinking lending margins.
The private bank reported a standalone net profit of 30.05 billion rupees ($361.7 million) in the quarter ended Dec. 31, compared to analysts' expectations of 31.94 billion rupees as per LSEG data.
The standalone numbers do not include the business of its subsidiaries.
The bank's provisions and contingencies rose to 5.79 billion from 1.49 billion rupees a year ago.
Kotak Mahindra Bank also made provisions of 1.43 billion rupees on applicable alternative funds investments following stricter norms by the Reserve Bank of India, it said.
The bank's net interest income - the difference between interest earned and paid out - increased 16% on-year to 65.54 billion rupees.
However, net interest margin (NIM) - the difference between interest obtained on loans and paid on deposits expressed as percentage - shrank to 5.22% from 5.47% last year, but remained flat from the previous quarter.
Indian lenders have been reporting double-digit loan growth consistently over the past few months owing to higher demand, but their margins have been pressured by rising deposit costs.
Earlier this week, HDFC Bank, India's biggest private bank, reported weak margins for a second consecutive quarter.
Kotak Mahindra Bank's loans grew 19% from last year, while deposits rose 18.6%.
Gross non-performing assets (NPA) ratio was at 1.73% at the end of December, compared to 1.72% at the end of September.
($1 = 83.0864 Indian rupees)
