Provisions and contingencies declined by a massive 97 percent year-on-year to Rs 23.59 crore at the end of June quarter compared to Rs 703.52 crore in the corresponding quarter of previous fiscal.
The fall in provisions stems from the improvement in asset quality metrics. During the quarter, the bank wrote back Rs 65 crore worth of provisions it had made specifically towards pandemic related risks. Gross non-performing assets as a percentage of gross advances fell by 10 bps sequentially to 2.24 percent and net NPAs declined by 2 bps to 0.62 percent in Q1FY23. Gross bad loans a year ago were 3.58 percent of the loan book.
Net interest income, which is a difference between interest earned and interest expended, grew by 19.16 percent to Rs 4,697 crore compared to same period last year, with 29 percent YoY growth in loan book.
Surprisingly, loan growth was driven by unsecured personal loans, credit cards, consumer durable loans and business loans, both on a year-on-year basis and sequentially. Kotak Mahindra Bank has been a conservative lender in the past but it seems to have shed this for the June quarter.
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