Private lender reported a 10.6 per cent decline in consolidated profit before tax (PBT) at Rs 2,674.4 crore for the quarter ended March 2020 (Q4FY20), from Rs 2,990.6 crore in the year-ago quarter mainly due to higher provisioning on account of Covid and lower other income.

The bank made provisions of Rs 713.7 crore on account of Covid-19 deferment cases, which are higher than the Reserve Bank of India’s (RBI’s) prescribed norms, it said.

While net interest income grew at a healthy 16.5 per cent, other income fell 37.8 per cent which also led to the decline in pre-tax profit.

As a result, its consolidated net profit fell 6.5 per cent to Rs 1,905 crore in Q4FY20, as against Rs 2,038 crore in the March 2019 quarter.

At the standalone level, profit before tax fell 20 per cent to Rs 1,677.8 crore. Gross non-performing assets (GNPA) at 2.25 per cent fell 21 basis points sequentially but were 11 bps higher compared with March 2019 quarter.

Provisions rose to Rs 1,047 crore in the March quarter driven by Rs 650 crore provided for Covid-19 related impact at the standalone level.

The provision coverage ratio improved to 69 per cent in Q4FY20 from 65.4 per cent in Q4FY19.The lender’s slippages have also declined significantly to Rs 491 crore in March 2020 quarter from Rs 1,062 crore in Q3FY20 and Rs 907 crore in Q4FY19.

Uday Kotak, MD & CEO of said, “In times like these, the strength of the balance sheet is very important. There will be focus on strong deposit franchise.”


The bank’s deposit base grew 16 per cent to Rs 2.62 trillion and savings deposit crossed Rs 1 trillion. The low cost current and savings accounts as a percentage of total deposits improved to 56.2 per cent at the end of March quarter from 52.5 per cent in the same period last financial year. Advances for the lender were up 7 per cent to Rs 2.19 trillion from Rs 2.05 trillion. The management said it would also tighten its underwriting standards when it comes to lending now.

“We have for some time in the pre-Covid world itself, been cautious in lending by design. We have also calibrated our mix and even in our retail business, the mix of our secured lending is significantly higher than unsecured lending,” Kotak said.

“In the Covid era, the unsecured lending segment will go through some tough time. Our portfolio in retail unsecured has been far more conservative and this will help us reduce the burden which may come in this segment in the post Covid era,” he said.

Net interest margin for the quarter was up marginally at 4.72 per cent compared with 4.69 per cent in December quarter, and up 26 bps from March 2019.

The bank has said, approximately 26 per cent of borrowers by value at account level have opted for the moratorium given by the (RBI) upto April 30, 2020.

“The extent to which Covid-19 pandemic will impact the bank’s operations and financial results is dependent on the future developments, which are highly uncertain,” the bank said.

The capital adequacy ratio stood at 17.9 per cent with Tier 1 capital at 17.3 per cent at the end of March, 2020. Shares of the bank closed 2.35 per cent higher at Rs 1,186.50 on the

“In sector after sector, consolidation is underway. We have seen it happening in telecom, we may see it happening in airlines, and I do believe significant consolidations should take place in the financial sector in the coming months and years,” Kotak added.

Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd

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