Kotak Mahindra Bank (KOTAKBANK) Q2 24/25 earnings summary

Executive summary

• Consolidated profit after tax for Q2 FY25 reached ₹5,044 crore, up 13% year-over-year and 14% sequentially, with ROE at 13.88% and ROA at 2.53%.

• Standalone PAT was ₹3,344 crore, NIM at 4.91%, and customer assets grew 18% year-over-year.

• Subsidiaries delivered strong growth: Kotak AMC PAT up 60% YoY, Kotak Securities PAT up 37% YoY, and insurance up 50% YoY.

• Board approved unaudited consolidated and standalone results for the quarter and half-year ended September 30, 2024, with unmodified review reports.

• Results reflect a major divestment: 70% stake in Kotak Mahindra General Insurance sold to Zurich Insurance, resulting in a significant exceptional gain.

Financial highlights

• Consolidated net worth stands at ₹1,47,214 crore, with book value per share at ₹740, up 22% year-over-year.

• Customer deposits grew 16% year-over-year, with a CASA ratio of 43.6%, and customer assets rose 18% year-over-year.

• Net NPA at 0.43%; gross NPA at 1.49%; provision coverage ratio at 71%.

• Net interest income for Q2FY25 was ₹7,020 crore, up 11% YoY; net total income at ₹9,704 crore, up 13% YoY.

• Exceptional pre-tax gain of ₹3,803.40 crore (consolidated) from the sale of insurance subsidiary stake.

Outlook and guidance

• Expectation of improved demand in H2 for commercial vehicles and tractors, with rural cash flows and collection efficiencies likely to recover.

• Slippages in unsecured and microfinance expected to stabilize and decline over the next two to three quarters as legacy portfolios run down.

• Credit cost anticipated to stabilize and trend down in coming quarters, barring unforeseen macro changes.

• Acquisition agreement signed to purchase Standard Chartered Bank India's personal loan book (~₹4,100 crore), subject to regulatory approvals.

• Management expects continued growth in retail and digital banking segments, with ongoing focus on asset quality and capital adequacy.