MUMBAI (Reuters) – India’s Kotak Mahindra Bank on Saturday reported a lower-than-expected 5% increase in July-September profit on higher loan provisions while lending margins shrank.
The private lender’s standalone net profit, excluding subsidiaries, rose to 33.44 billion rupees ($397.8 million) in the second financial quarter from 31.91 billion rupees last year.
That was below the average analyst estimate of 34.17 billion rupees, according to data compiled by LSEG.
Provisions and contingencies, or funds set aside for potential bad loans, rose nearly 80% to 6.60 billion rupees.
Its gross non-performing assets ratio, a gauge of asset quality, deteriorated to 1.49% at the end of September from 1.39% at the end of June.
Kotak’s net interest income, the difference between what a bank earns on loans and pays out on deposits, increased 11% to 70.20 billion rupees from 62.97 billion a year earlier.
Its net interest margin, meanwhile, shrank to 4.91% from 5.22% last year, and was also lower than the 5.02% in the previous quarter.
Indian banks had been reporting double-digit percentage growth in outstanding loans since April 2022, helped by rising consumer spending. Deposit growth has slowed in recent quarters, forcing lenders either to slow their loan growth or raise more deposits, which has weighed on margins.
Kotak’s loans rose 17% in the quarter, while deposits were up 16%.
($1 = 84.0650 Indian rupees)
(Reporting by Siddhi Nayak; Editing by Varun H K and William Mallard)
