Kotak Mahindra Bank shares jump 10% after Q3 results; check key metrics and what management said on RBI embargo

The lender reported a 10.22% rise in its December quarter consolidated net profit to ₹4,701 crore.

The Mumbai-headquartered bank had reported a net profit of ₹4,265 crore in the year-ago period and ₹5,044 crore in the preceding September quarter.

On a standalone basis, the private sector lender's net profit increased to ₹3,304 crore from ₹3,005 crore in the year-ago period but was marginally down when compared with the September quarter's ₹3,343 crore.

The total income increased to ₹16,050 crore from ₹14,096 crore in the year-ago period, while the expenses came in at ₹10,869 crore against ₹9,530 crore in Q3 FY24.

The gross non-performing assets ratio inched up to 1.50% from 1.49% three months ago.

The overall provisions increased to ₹794 crore from ₹579 crore in Q3 FY24 and ₹660 crore in Q2 FY25.

The bank's chief executive and managing director, Ashok Vaswani, said the bank has made significant progress on the technology front to address concerns that led RBI to put business restrictions in place last April but added that while they are in touch with the central bank regularly, there is no word on when the embargo will be lifted.

The capital market arms, Kotak Securities and Kotak Mahindra Capital delivered a 59% growth in their profit at a combined ₹542 crore.

The share of the flagship bank business in the overall profit has gone down to 72% as a result of the same.

For the reporting quarter, its core net interest income rose 10% to ₹7,196 crore on the back of a 15% growth in advances and the net interest margin compressing to 4.93% from 5.22% in the year-ago period.

On a specific question on whether chief technology officer Milind Nagnur's resignation is linked to the embargo, Vaswani said the key executive decided to move back to the US because his family is based there and added that the bank will not be impacted by the sudden exit.

Vaswani said there was some evidence of an economic slowdown and with the volatilities like the one in the rupee seen in the last 6-8 weeks, the bank has to become more cautious in its approach.

Restrictions on not being able to onboard new credit card customers have been among the reasons why the share of the unsecured loans has dropped to over 10% for the lender, and the management added that it has the appetite to grow this share, even as regulatory concerns on the riskiness continue.