Kotak Mahindra Bank Q4 Results: Profit Jumps 18% To Rs 4,133 Cr, NII Hike 13%; Dividend Reveals Rs 2 Sh

Kotak Mahindra Bank on Saturday announced its fourth-quarter financial results for the fiscal year 2023-24, showcasing robust performance amidst regulatory headwinds. The bank reported a remarkable 18% surge in net profit, reaching Rs 4,133 crore, compared to Rs 3,496 crore in the same quarter of the previous fiscal year.

One of the key drivers of this growth was the impressive increase in net interest income (NII), which rose by 13.2% year-on-year (YoY) to Rs 6,909 crore from Rs 6,103 crore last year. Maintaining a healthy net interest margin (NIM) of 5.28% for Q4 FY24 underscored the bank's strong financial position.

Kotak Mahindra Bank demonstrated resilience with a decline in both gross non-performing assets (GNPA) and net non-performing assets (NNPA). GNPA decreased to 1.39% from 1.78% YoY, while NNPA decreased to 0.34% from 0.37% YoY, reflecting effective risk management strategies.

Kotak Mahindra Bank acknowledged the impact of recent regulatory restrictions imposed by the Reserve Bank of India (RBI) on its digital and other business operations. The bank outlined potential challenges affecting its franchise, customers, and directly impacted businesses, particularly new credit cards and customer acquisition through the 811 platform.

"We believe recent negative events and high attrition make the outlook for Kotak unpredictable. We learn from senior bankers that the ban will put the bank one-two years behind aggressive peers. Many banks acted on RBI nudges in Q4. While some may have been asked to, we believe some, like ICICI, voluntarily improved LDR and LCR and slowed unsecured loans," Nuvama Equities said in the report.

The bank's advances witnessed substantial growth, increasing by 20% YoY to Rs 3.91 lakh crore compared to Rs 3.25 lakh crore in the previous year. This growth was complemented by increases in average current deposits to Rs 60,160 crore for Q4 FY24 and average savings deposits to Rs 1.23 lakh crore. Term deposits also saw a significant uptick, reaching Rs 2.24 lakh crore for Q4 FY24.

"Kotak already saw many senior-level exits last year. Uday Kotak, CEO, and Dipak Gupta, Joint MD, had to exit the bank due to the RBI's cap on WTD tenors; the CFO reached retirement age, the CDO resigned in November, and Kotak's attrition rate remains higher than peers," Nuvama added.

For the full fiscal year FY24, Kotak Mahindra Bank's profit surged to Rs 13,782 crore, marking an impressive 26% YoY growth from Rs 10,939 crore in FY23. This consistent performance underscores the bank's strong fundamentals and strategic initiatives.

"We believe the recent changes will hurt growth and profit at least for 12-18 months. We cut target multiples sharply to 1.7x PBV FY26E from 2.2x. Our new TP is INR 1,530 versus INR 2,095 earlier," Nuvama said.

Dividend Declaration and Regulatory Response

The bank's board declared a dividend of Rs. 2 per share for fiscal 2024. However, this declaration is subject to shareholders' approval in the upcoming annual general meeting, emphasising the bank's commitment to shareholder value.

Kotak Mahindra Bank acknowledged the impact of recent regulatory restrictions imposed by the Reserve Bank of India (RBI) on its digital and other business operations. The bank outlined potential challenges affecting its franchise, customers, and directly impacted businesses, particularly new credit cards and customer acquisition through the 811 platform.

To mitigate the impact, the bank stated its intention to redeploy resources strategically and believes that these regulatory directions will not materially affect its overall business operations. This proactive approach demonstrates the bank's agility in responding to regulatory changes while safeguarding its business interests.

Kotak Mahindra Bank's Q4 results underscore its resilience and ability to navigate challenges while delivering sustained growth.