Kotak Bank's rollercoaster: From setbacks to surging Q4 performance

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resignation of its joint managing director KVS Manian, who had been with the bank for almost three decades. In the aftermath of the RBI's intervention, Kotak witnessed a sharp decline in its share price, plummeting from a high of ₹1,846 on 24 April to a low of ₹1,544 by 3 May, just ahead of the release of the bank's March quarter results (Q4FY24), all within a span of six trading sessions. The Q4 results, announced on Saturday, came as a relief, boasting robust performance propelled by a surge in fee income.

Investors responded positively, driving the stock up by 5% on Monday. Kotak Bank’s results have to be analyzed on a standalone basis, as some of its subsidiaries like insurance have different dynamics and need to be valued on separate parameters. The bank’s standalone operations accounted for 75.6% of the group net profit for FY24, thus necessitating deeper understanding.

For Q4FY24, net interest income (NII) grew almost 11% year-on-year to ₹6,767 crore on a standalone basis after excluding the interest on income tax refund of ₹142 crore. The growth in NII is even more impressive considering that the bank’s credit-to-deposits ratio at 84% is not stretched and deposit mobilization was healthy. The robust deposit mobilization gives headroom to grow advances over the next couple of quarters when deposit growth could get affected by the RBI restriction for sourcing new customer business digitally.

In the earnings call, the management has indicated a potential operating profit hit of ₹300-450 crore in FY25 due to the RBI ban. Meanwhile, Kotak’s core fee based other income grew about 30% year-on-year in Q4FY24 to ₹2,841 crore with impressive increase across distribution, syndication and general banking fees. Core