Kotak Mahindra Bank’s numbers came as a disappointment on Monday as its asset quality weakened in the December quarter of 2019 even as standalone net profits rose 24 per cent to Rs 1,596 crore because of lower tax outgo.

The private sector lender had reported a net profit of Rs 1,291 crore in the October-December period of the previous financial year.

During the quarter, the lender’s core net interest income (interest earned from loans minus interest paid on deposits) increased to Rs 3,430 crore from Rs 2,926 crore in the year-ago period, up 17 per cent.

However, employee costs rose to Rs 1,092 crore from around Rs 837 crore a year ago as the bank made certain “non-recurring charges relating to pension obligation of eligible employees”.

Thus, it was the lower tax expense at Rs 348.17 crore against Rs 679.78 crore in the year-ago period that contributed to the 24 per cent rise in profits.

However, the bank’s asset quality disappointed the street. The percentage of gross NPAs to gross advances rose to 2.46 per cent from 2.32 per cent in the preceding three months, bad loans in absolute terms grew to Rs 5,413.20 crore from Rs 5,033.55 crore in the second quarter of this fiscal.

The bank’s scrip plunged 4.70 per cent to close at Rs 1,618.05 on the BSE.