Kotak Mahindra Bank Q4FY21 Result Analysis | Yadnya Investment Academy

Published on 05 May 2021
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Private Bank Major Kotak Mahindra Bank has announced their Q4FY21 result on Monday 3^rd May 2021. We will analyze the quarterly as well as the yearly performance of the Bank in the Financial Year 2021. So, to know more about the performance of the bank in various aspects, read this blog.

Introduction:

Kotak Mahindra Bank is one of the largest Private Sector banks in India which is having a diversified financial services group providing a wide range of banking and financial services like Banking- Retail & Corporate, Life Insurance, Asset Management, and many more.

1) Q4FY21 Results Analysis:

The scenario of low-Interest Rates in the country has impacted the Interest Earnings of the Bank. It has fallen by 5% YoY from Rs. 6,805 Cr. in Q4FY20 to Rs. 6,449 Cr. in Q4FY21. Sequentially, it is down by 3% from Rs, 6,559 Cr. in Q3FY21.
On the Other hand, the Interest Expenditure of the bank has gone down by 20% YoY and 6.4% QoQ. Interest Expenditure of the bank was Rs. 3,245 Cr. in Q4FY20 and Rs. 2,783 Cr. in Q3FY21 which has now come down to Rs. 2,606 Cr. in Q4FY21.
In the case of Interest Expenditure, there is a consistent decline in the Cost of Saving Deposits from 5.66% in March 2019 to 4.22% in June 2020 and 3.74% in March 2021.
A larger Fall in Interest Expenditure than the Interest Income is a positive sign for the bank.
This higher fall in interest expenditure has also resulted in a rise in Net Interest Income(NII) of the Bank. It was Rs. 3,560 Cr. in the Q4FY20 and the same has increased by 8% YoY to Rs. 3,843 Cr. in the quarter ended 31^st March 2021. Quarter-on-Quarter, the same has gone down by 0.9% from Rs. 3,876 Cr.
Non-Interest Income of the banks has shown positive growth in both manners- Sequentially as well as yearly. Non-Interest Income of the bank was Rs. 1,489 Cr. in Q4FY20 which has grown by 31% YoY to Rs. 1,949 Cr. in Q4FY21. Sequentially, it has increased up by 52% from Rs. 1,285 Cr. in Q3FY21.
Calculating the above factors like Interest Income, Interest Expenditure, and others we get the Net Total Income of the bank. The Net Total Income was Rs. 5,049 Cr. in the quarter ended 31^st March 2020, which has now up by 15% YoY to Rs. 5,792 Cr. in Q4FY21. This income has also increased by 8.4% QoQ.
Moving ahead to the Operating Expenses of the bank, it has also shown positive growth in this quarter from Rs. 2,324 Cr. and Rs. 2,258 Cr. in Q4FY20 and Q3FY21 respectively, to Rs. 2,385 Cr. in the last quarter of FY21. Operating Expenses have grown by 2.6% YoY and 5.6% QoQ.
The Pre-Provisioning Operating Profit of the bank is up by 25% YoY to Rs. 3,407 Cr. in the quarter ended 31^st March 2021. Quarter-on-Quarter, same has increased by 11% from Rs. 3,083 Cr. in Q3FY21.
Provision & Contingencies has increased by the Bank by massive 181% QoQ from Rs. 419 Cr. in Q3FY21 to Rs. 1,179 Cr. in Q4FY21. Also, YoY this has gone up by 12.7% from Rs. 1,047 Cr. in the last quarter of FY21. This heavy rise in provision has arisen a worrisome situation in the market.
Profit Before Tax (PBT) of the Bank has gone down by 10.3% QoQ to Rs. 2,228 Cr. in Q4FY21. Year-on-Year the same has increased by 33% from Rs. 1,678 Cr. in Q4FY20.
Net Profit of the Bank has also increased by 33% YoY to Rs. 1,682 Cr. in Q4FY21 from RS. 1,267 Cr. in Q4FY20. This figure is also down by 9.3% QoQ from Rs. 1,854 Cr. in Q3FY21.

Kotak Mahindra Bank- Q4FY21 Results

2) FY21 Performance:

On yearly basis, the Interest Earned by the bank has decreased by just 0.3% but the Interest Expenditure has gone down by 14.4% to Rs. 11,500 Cr. in FY21.
Net Interest Income of the Bank has gone up by 14% YoY from Rs. 13,500 Cr. in FY20 to Rs. 15,340 Cr. in FY21.
Non-Interest Income has just increased by 2% from Rs. 5,352 Cr. in FY20 to Rs. 5,459 Cr. in FY21.
While the Net Total Income of the Bank has increased by 10% YoY from Rs. 18,872 Cr. in FY20 to Rs. 20,799 Cr. in FY21.
Pre-Provisioning Operating Profit of the bank has increased from Rs. 10,021 Cr. in FY20 to Rs. 12,215 Cr. in FY21 amounting to a rise of 22% YoY growth.
Further, Provision & Contingencies of the bank has also increased significantly by 31% from Rs. 2,216 Cr. in FY20 to Rs. 2,912 Cr. in FY21.
Profit Before Tax (PBT) of the bank has also increased by 19% from Rs. 7,805 Cr. in FY20 to Rs. 9,303 Cr. in FY21.
Finally, the Net Profit of the Kotak Mahindra Bank has grown double-digit in FY21. It has gone up by 17% from Rs. 5,947 Cr. in FY20 to Rs. 6,965 Cr. in FY21.

Kotak Mahindra Bank- FY21 Performance

Conclusion:

Kotak Mahindra Bank has announced a decent quarterly result in Q4FY21 but has shown significant growth in provisioning and contingencies on a quarterly as well as yearly basis. Kotak Mahindra Bank is one of the largest banks in the private sector space and hence one should keep this stock on their radar but should proceed with investing with proper research and study.