growth in fee-based income from businesses like fund management
and broking has helped Kotak Mahindra Bank to report first
quarter results, which have exceeded expectations. Even
on the lending side, the bank has achieved growth rates,
which are way above other mid-sized private sector banks.
the quarter ended 30 June, 2006, consolidated net profits
surged 124.73 per cent to Rs104.43 crore from Rs46.47
crore for the previous year quarter. Consolidated income
increased 70.49 per cent to Rs776.58 crore from Rs455.51
income increased substantially by 62.98 per cent to Rs397.61
crore from Rs243.96 crore for the prior year quarter.
Interest expenses for the quarter went up by 75.22 per
cent to Rs187.59 crore, indicating modest pressure on
net interest margins.
and treasury income grew even better at 79.14 per cent
to Rs378.97 crore from Rs211.55 crore. The bank and its
subsidiaries in insurance, fund management and broking
businesses did exceedingly well during the quarter.
premium during the quarter jumped 131 per cent during
the quarter to Rs121.39 crore from Rs56.96 crore. Claims
and transfers to reserves in the insurance business was
Rs62 crore for the quarter, giving a net fund surplus
of Rs59.39 crore.
income, including commissions and brokerage, increased
76 per cent to Rs247.76 crore from Rs140.78 crore. Other
income for the quarter was Rs31.33 crore as compared to
Rs13 crore while profit on sale of investments was Rs17.19
crore against a loss of Rs5.22 crore. The bank booked
a loss of Rs38.69 crore on revaluation of its investments
in the insurance business.
profits for the quarter increased 111.2 per cent to Rs197.99
crore. Operating expenses were higher by 37.76 per cent
while staff costs went up by 86.07 per cent.
for non-performing assets, standard provisions and contingencies
increased substantially during the quarter to Rs227.75
crore from Rs71.04 crore for the previous quarter.
Mahindra Capital Company (KMCC) and Kotak Securities (KS)
became wholly owned subsidiaries of the bank with effect
from 31 May, 2006, on acquisition of 25.1 per cent each
held by Goldman Sachs for Rs333 crore. Hence the consolidated
results also include the performance of these companies
from that date, besides 75 per cent of profits till that
bank is also planning a restructuring of its subsidiaries.
A proposal to de-merge the trading and primary dealership
division of KMCC into the bank has been approved by the
board. Trading & clearing operations and strategic
investments of Kotak Mahindra Securities would be merged
Mahindra is also planning to infuse additional capital
into Kotak Mahindra Securities, Kotak Mahindra (International),
Mahindra (UK), Kotak Mahindra Inc and Global Investment
Opportunities Fund to make these companies direct subsidiaries
of the bank.