Kotak Mahindra Bank Q3 FY 2016 net profit jumps 36.6%

Kotak Mahindra Bank, India’s fourth largest private lender by branch network, met analysts’ expectations as it reported a 36.6 percent rise in standalone net profit for the three-months to December 2015, at Rs 634.72 crore from Rs 464.52 crore in the corresponding quarter a year earlier.

The results announced on Monday included those of the erstwhile ING Vysya Bank. Kotak Mahindra Bank said the earnings were not comparable with the corresponding period of the previous year. Kotak Mahindra Bank had completed the merger with Bangalore-based ING Vysya Bank in April 2015.

Kotak Mahindra Bank had acquired ING Vysya Bank in an all-stock deal announced in November 2014, valuing the smaller bank at $2.4 billion. The complete integration is expected to be completed by May this year.

After the earnings were announced, shares of Kotak Mahindra Bank edged down 1.18 percent or Rs 7.95 to Rs 668 from its previous close of Rs 675.95 at the Bombay Stock Exchange.  

Net interest income, the difference between interest earned and interest expended, for Q3FY2016 was around Rs 1,766 crore, up 66.7 percent for the corresponding period a year earlier, the bank said.

The merger of ING Vysya with Kotak Mahindra propelled the latter into the top ranks of India’s private lenders at number 4 [by branch network].  

As of December 2015, the combined entity has total deposits of Rs 1,30,939 crore and advances of Rs 1,15,345 crore.  Kotak Mahindra Bank has a total network of 1,298 full-fledged branches and 1,987 ATMs across the country.  

The bank said it plans to reach 1,400 branches by December-end 2017.

Disclosing its digital expansion, Kotak Mahindra Bank on Monday said mobile transactions were at Rs 2,300 crore per month in December 2015. The bank now has a 6.8 percent share (as of November 2015) in value of mobile banking transactions, based on RBI data.

In recent months, Uday Kotak, the bank’s executive vice-chairman and managing director, has outlined the path to strategic growth which it has taken. Besides the ING merger, Kotak Mahindra Bank has picked up a 15 percent stake in multi-commodity exchange (MCX) and bought PineBridge’s mutual fund business. They have also announced their entry into general insurance and also tied up with Bharti Airtel for a payments bank licence.

With the merger, Kotak Mahindra Bank got a strong presence in Southern India, particularly in the states of Karnataka and Andhra Pradesh. Kotak Mahindra Bank has most of its branches in West and North India. Its strength is in corporate and retail banking while in the erstwhile ING Vysya’s case, it is in small and medium enterprise business (SMEs) operations, which will complement Kotak Mahindra Bank.

Kotak Mahindra Bank has expanded at a time when the Indian banking sector is still undergoing tough times, where credit growth is yet to pick up and non-performing asset levels for several banks are high.