Kotak Mahindra Bank reported a larger-than-expected drop in Q4FY25 profit, down 14% YoY at Rs 35,517 crore Vs Rs 41,333 crore in Q4FY24. The drop in quarterly profit was as a result of the huge provisions which rose as potential bad loans surged, offsetting solid loan growth.
The Q4FY25 net interest income (NII), the difference between what a bank earnings on loans and pays out on deposits, rose 5% to Rs 72,840 crore rupees. As per Elara Securities, “NII growth was thus 1.2% QoQ (much lower than 4% plus numbers reported by peers).” The net interest margin or NIM shrank to 4.97% from 5.28% a year earlier, but was higher than 4.93% reported in the previous quarter.
The entire list of bank stocks will watch out for the impact if the higher provisioning on the Kotak Mahindra Bank share price.
Kotak Mahindra Bank Q4: Margins under pressure
The private sector lender reported 4 bps rise in Q4 NIMs QoQ to 4.97%. The Bank’s deposit growth was 5.2% QoQ / 11% YoY. The slippages were restricted to Rs 14,880 crore. Slightly better on a sequential basis. They were at 1.6% in Q4FY25 Vs 1.8% in Q3FY25), feeding into GNPLs/NNPLs of 1.4%/31bps Vs 1.5%/0.41% QoQ.
In a falling interest rate scenario, lenders typically pass on central bank rate cuts to borrowers, making loans more attractive, but the pass-through to deposit rates comes with a lag, temporarily compressing margins until the adjustment is fully reflected across both sides of the balance sheet. A majority of Kotak’s loan book is linked to the external benchmark, putting its margins under pressure.
Kotak Mahindra Bank Q4: Credit cost higher
Kotak Mahindra Bank’s credit cost was also higher than estimates in Q4FY25. This includes provision on AIF investment of Rs 56 crore. Looking at other subsidiaries, the AMC business has done well while life insurance and securities businesses saw some impact.
The bank’sLoan growth came in at 3.2% QoQ and 13.5% YoY, much lower than estimates as per Elara Securities. The bank stated that average advance growth (ex- IBPC) was 18% YoY.