RBL Bank on Saturday reported a disappointing set of numbers with net profits for the quarter ended December 31 crashing 86 per cent as there was a sharp rise in provisions for microfinance loans.
On the other hand, Kotak Mahindra Bank has posted a 10 per cent growth in its consolidated net profit at ₹4,701 crore, aided by performance of capital markets-linked arms.
On a standalone basis, the private sector lender’s net profit for the October-December period rose by 10 per cent.
RBL Bank reported a net profit of ₹32.63 crore against ₹233.09 crore in the corresponding period of the previous year.
Incidentally, RBL Bank would have slipped into a loss had it not been for a tax write back of ₹150.13 crore, which the lender said was based on the favourable appellate orders received for past assessment years.
There was also a ₹144.15 crore gain from the sale of the bank’s stake in DAM Capital, which had come out with an IPO.
RBL Bank provisions
During the quarter, RBL Bank made provisions of ₹1,188.90 crore compared with ₹458.14 crore in the year-ago period, a rise of 159 per cent.
The bank said that it has made an additional provision of ₹414.01 crore on its Joint Liability Group (JLG) portfolio.
Its asset quality also deteriorated on a sequential basis when gross non-performing assets (NPAs) in absolute terms rose to ₹2,701 crore from ₹2,581.08 crore whereas the gross NPAs percentage inched up to 2.92 per cent from 2.88 per cent.
However, the net NPA ratio declined to 0.53 per cent from 0.79 per cent.
RBL Bank said the additional provision on the JLG book was made on a prudent basis and that it takes the total provision on this portfolio to 85 per cent.
Kotak Bank action
Kotak Bank’s chief executive and managing director Ashok Vaswani said the bank has addressed the concerns on the technology front that led the RBI to place business restrictions last April, but added that while they are in touch with the central bank regularly, there is no word by when the embargo will be lifted.
Capital market arms Kotak Securities and Kotak Mahindra Capital delivered a 59 per cent growth in its profit at a combined ₹542 crore.
The share of the flagship bank business in the overall profit has gone down to 72 per cent as a result of the same.
Total income increased to ₹16,050 crore from ₹14,096 crore in the year-ago period, while expenses came at ₹10,869 crore against ₹9,530 crore.
The gross non-performing assets ratio inched up to 1.50 per cent from 1.49 per cent three months ago.
Core net interest income for the quarter increased to Rs ₹7,196 crore, from ₹ 6,554 crore a gain of 10 per cent over the last year period. Net interest margin compressing to 4.93 per cent from 5.22 per cent in the year-ago period.
Other income grew 14 per cent to ₹2,623 crore, pushed up by a 10 per cent growth in fee income at ₹2,362 crore.
On the RBI embargo, Vaswani said the cost of the embargo is within the ₹450 crore annualised hit which it had expected.