Mumbai: Kotak Mahindra Bank on Wednesday reported a 20 per cent jump in its consolidated September quarter net at Rs 1,747 led by healthy performance in its flagship lending business.
At the standalone level, the bank, which is the fourth largest among the private sector lenders, saw a 20 percent rise in profit to Rs 1,141 crore, while its in-house NBFC "Prime" reported a net of Rs 157 crore and the life insurance arm posted a Rs 127 crore profit.
The city-headquartered bank said it continues to be in discussions with the Reserve Bank on ways of getting down its promoter holdings to 15 per cent by March 2019 after a previous attempt through a preference shares sale was rejected by the regulator, saying debt instruments divested did not meet its equity dilution norms.
Kotak Bank had on August 2 issued preference shares using the perpetual non-cumulative preference share route, to reduce promoter Uday Kotak's shareholding, which RBI had on August 14 rejected.
The bank had issued 8.10 per cent worth Rs 500 crore non-convertible perpetual non-cumulative preference share to reduce Kotak's stake. After the issue, Kotak's shareholding in the bank had come down to 19.7 per cent from 29.7 per cent.
But it can be noted that the same provision is allowed under several provisions of the Sebi, the Companies Act, the Banking Regulation Act, and Basel-Ill norms, the private lender had maintained.
The bank had earlier said that promoters only have 15 percent voting rights under the RBI Regulations Act, which in itself is a reduction of control in an entity.
Even as the RBI came down heavily on peer Bandhan Bank for not following the shareholder norms, Kotak Bank stressed that its case is different and one should not compare it with others where the regulator may have taken adverse actions for non-compliance.
It is discussing the "entire proposition" and policy behind it, joint managing director Dipak Gupta told reporters."Don't go by that number on that day alone....You cannot relate this to what the regulator might have done for other cases. This is a very different case. We will come back once there's anything specific to report."
Gupta said the bank said it has an exposure of Rs 13,000 crore to the troubled NBFC sector, including Rs 1,200 crore to its own group companies, but claimed that the situation is "comfortable" as according to chief financial officer Jaimin Bhatt, 90 per cent of the exposure is to companies rated AA or above.
When asked about the exposure to the crippled IL&FS group, where the bank founder Uday Kotak is the chairman now. Bhatt said it is "insignificant". He also said its exposure to the NBFCs has declined to 5.1 per cent from the 5.1 per cent
of book last year.
Gupta said as NBFCs face stress, the bank will be on the lookout for buying healthier portfolios from them.
It has an exposure of Rs 7,700 crore to the commercial realty sector, another "sensitive" sector. For the reporting quarter, its net interest income jumped to Rs 2,689 crore from Rs 2,313 crore, and the other income rose to Rs 1,205 crore from Rs 953 crore.
It reported a 21 per cent growth in advances with only business banking, where it is seeing signs of stress building up, being at a slower 2.5 per cent.
There was a compression in net interest margin to 4.21 per cent as the cost of funds accelerated faster, but Gupta said the rising interest rates scenario can lead to an expansion in the future.
On the asset quality front, fresh slippages came down to Rs 420 crore, while the gross non-performing assets ratio improved to 2.15 per cent from 2.47 per cent a year-ago.
Provisions rose to Rs 353 crore from Rs 216 crore and Bhatt attributed this to other provisions including on investments
At a consolidated level, the capital adequacy stood at a healthy 18.7 per cent.
Kotak Bank counter closed Wednesday flat on BSE with a negative bias at Rs 1,177.30 on a day the benchmark Sensex jumped 0.55 per cent after weeks of heavy loses.