A recent press report said that Kotak Mahindra Bank’s net profit has increased by 35 per cent to Rs 252 crore during the quarter ended June 30, 2011, from Rs 187 crore in the year-ago quarter. Reports said that the growth in profits was due to the growth in interest income and lower provisions.
Mr. Jamin Bhatt, Group Chief Financial Officer, Kotak Mahindra Bank said that the high interest rates have tightened the Net Interest Margins and the consequent rise in cost of funds. He said that a high capital base and a focus on lending to niche segments which offer better yields helped the bank keep the NIM stable. He also said that the bank would be able to maintain the NIM at around 5 per cent, as all Base Rate have changed.
He also said that lower provisions, at Rs 22 crore (Rs 56 crore), have helped the profit growth and most of the banks have started making lesser provisions as credit quality has been good in the past 12 to 15 months.
Mr. Bhatt also said that a higher part of credit growth has come from the commercial (commercial vehicle, agriculture, capital markets) and wholesale segments (corporate loans). The growth in the retail segment (home loans, car loan, personal loan) has been lower.