Kotak Mahindra Bank declared its Q1 results for this financial year on Monday (27th July 2020). They posted an 8.51% fall (YoY) in net profit at Rs 1,244.45 crore for the quarter ended June 30. Last year, net profits were reported to be Rs 1,360 crore in the same period. 

Some analyst estimated that profits will lie between Rs 1,300 crore and Rs 1,821.5 crore. The amount declared is below that what was forecasted but the gap is not a big one. 

Q1 FY21Q4 FY20Q1 FY20QoQYoY
Net Interest Income(crore)3,7243,5603,1614.6%17.8%
Net Profits(crore)1,2441,2671,360-1.8%-8.5%

On a brighter side, Kotak Mahindra Bank has recorded an upswing in their Net interest income. The NII for the quarter ending June rose YoY by 17.8% from Rs 3,161 crore to Rs 3,724 crore.  In the past few days, Axis Bank and ICICI Bank also declared their Q1 results.

Axis Bank and Kotak Mahindra Bank, both have declared a YoY fall in net profits, though the fall in results of the former (-19%) was more. In contrast to these two, ICICI Bank has registered a YoY gain in net profits by 23%. This gain in net profits of ICICI Bank is due to the sale of shares present in ICICI Prudential Life and ICICI Lombard. Around 1.5% stake in ICICI Prudential Life and a 3.96% stake in ICICI Lombard were sold in the month of June. This increased the profits and thus, gave a better overall outlook to the Bank.

“The continued slowdown in economic activities has impacted lending business, fee income generation from the sale of third party products or usage of debit/ credit cards, collection efficiency etc. This slowdown may impact customer defaults and consequently increase in provisions at the group level,” Kotak Mahindra Bank said in a release.

Almost a 3 times spike can be witnessed in the provisions made when compared to the same quarter previous year from Rs 316.76 crore to Rs 962.01 crore. Additional Covid-19 related general provision of Rs 616 crore has been made by the bank.

The slowdown in economic activities is one of the major reasons for the fall in profits. Lending to business has decreased and income from the sale of third-party products like credits cards has also faced a massive decline.