Kotak Mahindra Bank Q4FY18 surprises, misses estimates, PAT rises 15%, Uday Kotak re-designated MD and CEO

Kotak Mahindra Bank Q4FY18: This private lender surprisingly missed analysts estimates in its standalone net profit during fourth quarter March 2018 results, despite reporting a growth of over 15% on yearly basis. The bank recorded a standalone PAT of Rs 1,124.05 crore in Q4FY18, which rose by 15.12% compared to Rs 976.48 crore in the corresponding period of the previous year. The Q4FY18 PAT witnessed gradual increase of 6.72% from income of Rs 1,053.21 seen in preceding quarter. A Bloomberg poll of analysts expected the bank’s PAT to come in at Rs 1,170 crore in Q4FY18. 

Kotak’s Q4FY18 PAT was expected to come at Rs 1,204.3 crore, with Net Interest Income (NII) at Rs 2,498.9 crore, as per Prabhudas Lilladher. 

Going ahead standalone net interest income came in at Rs 2,579.75 crore, registering growth of 19.36% from Rs 2,161.37 crore in Q4FY17 and up by 7.77% versus Rs 2,393.72 crore in Q3FY18. 

Net Interest Margin (NIM) for Q4FY18 at 4.35% as against 4.63% in Q4FY17

Interestingly, provisions of Kotak increased by 14.78% to Rs 306.91 crore in Q4FY18, compared to provisions of Rs 267.37 crore a year same period. This Q4FY18 provisions surged by a massive 44.24% from Rs 212.77 crore in Q3FY18. 

On the other hand, gross non-performing assets (GNPA) stood at Rs 3,825.38 crore which rose by 6.90% from Rs 3,578.61 crore in Q4FY17 and gradually up by 2.97% from Rs 3,714.99 crore in Q3FY18.

However, GNPA in percentage terms eased to 2.22% in Q4FY18 versus 2.59% in Q4FY17 and 2.31% in Q3FY18. 

Advances as on March 2018 were up 25% to Rs 169,718 crore compared to Rs 136,082 crore as on March 31, 2017. 

Average Savings deposits grew by 58% to Rs 61,223 crore for Q4FY18 compared to Rs 38,628 crore for Q4FY17. Average Current Account deposits grew by 25% to Rs 27,024 crore for Q4FY18 compared to Rs 21,637 crore for Q4FY17. 

With this, CASA ratio as on March 31, 2018 stood at 50.8% compared to 44.0% as on March 31, 2017.

Capital adequacy ratio of the Bank, as per Basel III, as on March 31, 2018 is 18.2% and Tier I ratio is 17.6%. 

It needs to be noted that, Kotak’s employee cost impacted by Rs 82 cr due to change in gratuity ceiling. 

Kotak in it’s financial audit report said, “Dispensation given by RBI on amortisation of mark-to-market losses not availed.”

In a meeting held on Monday, Kotak said, “The Board of Directors at its meeting held today has recommended a dividend of Rs  0.70 per equity share having face value of Rs  5 for the year ended 31st March, 2018 (Previous Year Rs 0.60 per equity share having face value of Rs 5). The dividend will be paid after the approval of shareholders at the Annual General Meeting.”

Further, the bank has s re-designated Uday Kotak as Managing Director & CEO with effect from P 1 May 2018, in line with good governance practice. 

After the announcement, Kotak’s share price surged by nearly 3%, however, it was trading at Rs 1,206.25 above Rs 17.70 or 1.49% at around 1429 hours.