Kotak Mahindra Bank Q2 Results: Profit Rises 5%, NII Grows 11%, AUM Surges 37%.

Kotak Mahindra Bank, a leading private sector lender, reported a 5% YoY rise in standalone profit after tax (PAT) to ₹3,344 crores for Q2 FY25, up from ₹3,191 crores last year. Net interest income (NII) grew by 11% to ₹7,020 crore. However, the net interest margin (NIM) declined from 5.22% to 4.91% YoY.

On a consolidated level, Kotak’s profit after tax (PAT) saw a 13% year-on-year (YoY) increase, reaching ₹5,044 crores. The Q2 results also reported that as of the end of September 2024, the bank's total assets under management (AUM) surged 37% YoY to ₹6,80,838 crores, up from ₹4,98,342 crores in Q2FY24.

Quick Insights:

• Revenue: ₹7,020 crores, up by 11% YoY.
• Net Profit: ₹3,344 crores, increased by 5% YoY.
• Segment Performance: Advances grew 17% YoY to ₹4,19,108 crores, while CASA ratio improved to 43.6% from 43.4%, in the previous quarter. 
• Management's Take: Despite challenges, the bank posted strong growth, driven by higher customer deposits and a stable CASA ratio. The outlook remains positive.
• Stock Reaction: Kotak Mahindra Bank’s shares fell around 4% to ₹1,793.85, Monday open market.

Management Commentary:

The bank's MD & CEO, Ashok Vaswani, highlighted the resilient performance in customer deposits and CASA ratio, which remained stable at 43.6%. However, he mentioned that the bank experienced slowness in rural India, especially in sectors like commercial vehicles and microfinance. “We have seen stress in the microfinance industry as well as some over leveraging of customers which is reflected in personal loans and credit cards. But overall in the bank our credit to deposit ratio was at a good 86.4 per cent," he added. 

He also pointed to a strategic acquisition of Standard Chartered Bank’s ₹4,100 crore personal loan portfolio to boost its consumer lending business. He added, “Apart from scaling personal loan business, this also gives us 95,000 affluent customers with whom we are hoping to establish a much broader relationship.”

Stock Market Reaction:

On Friday, Kotak Mahindra Bank’s shares showed a modest increase, rising 0.32% to close at ₹1,869.80 on the BSE. The Q2 results were announced post market hours.

Whereas on Monday, after announcing the quarter results, there was some concern around the slight drop in NIM and rising slippages, which led to around 4% fall in shares to ₹1,793.85 on the NSE.

About the Company & Upcoming News:

Kotak Mahindra Bank is one of India’s private sector banks. The bank has recently announced a strategic acquisition of Standard Chartered Bank's personal loan book, a move aimed at expanding its consumer lending business. The bank’s total customer base as of September 2024 stood at 5.2 crore, up from 4.6 crore a year ago, and it continues to focus on strengthening its position in the Indian financial services market.