India’s Kotak Mahindra Bank Q3 profit rises 10% on higher lending income

(Reuters) – India’s Kotak Mahindra Bank (KTKM.NS), on Saturday reported a 10% rise in quarterly profit as it boosted lending, although provisions for potential bad loans surged.

The Mumbai-based private lender’s standalone net profit – which excludes earnings from its subsidiaries – rose to 33.05 billion rupees ($382 million) in the three months to end-December, in line with an LSEG consensus estimate.

Its net interest income, the difference between what a bank earns on loans and pays out on deposits, rose 10% to 71.96 billion rupees.

The net interest margin shrank to 4.93% from 5.22% a year earlier, but was slightly higher than the 4.91% reported in the previous quarter.

Kotak’s loans rose 16% in value terms in the December quarter, while deposits were up 15%.

The loan growth comes despite restrictions placed on Kotak since April 2024 by the central bank, which prevent it from taking on new digital clients and issuing credit cards. The penalty was imposed for gaps in its IT infrastructure.

But Kotak’s provisions and contingencies, or funds set aside for potential bad loans, jumped 37% to 7.94 billion rupees.

Gross non-performing assets ratio, a key gauge of asset quality, worsened slightly to 1.50% at the end of December from 1.49% at the end of September.

Most Indian banks saw asset quality worsen during the April-October period last year, with bad loans rising primarily in the microfinance and unsecured segments.

Earlier this week, private lender Axis Bank missed quarterly profit estimates on slower loan growth and higher bad loan provisions.

($1 = 86.5710 Indian rupees)