Kotak Mahindra Bank on Saturday surpassed street estimates when it posted a 26 per cent rise in standalone net profits for the quarter ended March 31, 2023. The private sector lender reported a net profit of Rs 3,496 crore against Rs 2,767 crore in the same period of the previous year.

Analysts were expecting the bank to report a net profit of around Rs 3,000 crore.

The better-than-expected performance came on the back of a strong 35 per cent growth in its core net interest income (NII) which rose to Rs 6,103 crore from Rs 4,521 crore in the year-ago period.

During the quarter, its asset quality also showed an improvement with the ratio of gross non-performing assets (NPAs) to gross advances declining to 1.78 per cent from 1.90 per cent on a sequential basis.

In absolute terms, the gross NPAs fell to Rs 5,768.32 crore from Rs 5,994.57 crore during the same period.

The bank said the decision to appoint promoter Uday Kotak as a non-executive director is in accordance with law.

On a specific question on its interest in IDBI Bank, MD and CEO Uday Kotak said the bank is “not afraid” of undertaking a big acquisition and it will assess any proposal based on the value it brings.

Faced with a regulatory mandate restricting an MD and CEO's term to 15 years, the Kotak Mahindra Bank board had earlier this year decided to appoint Uday Kotak as the non-executive director after his current term ends in December.

Since the announcement of Uday Kotak as a non-executive director, some concerns were raised about whether this will get the regulatory nod because, in its April 2021 circular, the RBI also makes it clear that there should be a three-year cool-off period before an MD and CEO is reappointed.

“What we have come to is something that we really believe is in accordance with law and regulations. And we do believe that it is in the best interest of all the stakeholders,” CFO Jaimin Bhat said.