India's Kotak Bank Q2 profit rises 29pct, beats estimates

MUMBAI: India's Kotak Mahindra Bank reported a higher-than-expected quarterly profit on ​Saturday, driven by stronger loan demand and lower ‌provisions for bad loans.

The country's third-largest private lender by market capitalisation posted a stand-alone net profit of 42.11 billion Indian ​rupees (US$443.5 million) for the three months ended September, ​up from 32.53 billion rupees for the same period last year.

Analysts had ⁠expected a profit of 41.04 billion rupees, according to ​data compiled by LSEG.

Indian banks experienced strong loan growth during the financial second quarter ​across both corporate and retail segments, with lending against foreign-currency non-resident deposits ‌also ⁠contributing to growth.

In June, the Reserve Bank of India introduced measures, including concessional hedging facilities and swap arrangements, to attract foreign currency deposits.

Kotak Bank's net interest income rose 16 per cent to 84.6 ⁠billion rupees, aided by a 25 per cent rise in domestic loans. Deposits grew 23 per cent.

Its net interest margin, a key measure of the bank's profitability, fell to 4.31 per cent from 4.53 per cent three months earlier on account of FCNR deposit mobilisation during the quarter.

Funds ​kept aside ⁠for potential bad loans and other losses fell 15 per cent to 8.04 billion rupees.

The bank's other ​income, which includes income from bonds and ​other investments, ⁠rose 23 per cent year on year to 31.94 billion rupees amid volatile currency and debt markets.

The Mumbai-based lender's asset quality improved marginally, with the gross non-performing asset ⁠ratio ​at 1.04 per cent at the end ​of September, compared with 1.18 per cent in the prior three months.