Shares of State Bank of India and Kotak Mahindra Bank broke on Monday. The reason for this is the income of both banks being weak in the fourth quarter. SBI shares fell 1.26 per cent while Kotak Mahindra Bank shares fell by about 4.5 per cent. SBI shares closed at Rs 790 on BSE while Kotak Mahindra Bank shares remained at Rs 2,085.05.
Due to the increase in provisions, SBI’s net profit declined by 10 per cent to Rs 18,643 crore on an annual basis in the fourth quarter. The net interest income (NII) of the lender gained just 2.69 per cent to Rs 42,775 crore on an annual basis. The bank’s net interest margin (NIM) declined to 3 per cent in the fourth quarter, which was 3.10 per cent in the previous quarter and 3.30 per cent in the same period of a year ago.
The MK said in a report on Monday, the quarter remained a little soft for SBI as the earlier payment of corporate loans reduced to 12.4 per cent on an annual basis while income decreased by 5 per cent due to high operational expenditure (employee cost and deposit insurance) and provisions (standard property, investment and PLI promotion).
McWery Capital said in its report, the management has estimated NIM in FY 26 at 3 per cent. This is amazing because it includes a cut of 100 basis points in the rates in this cycle. He hopes that the decline in NIM will be limited due to rate cuts.
On the other hand, Kotak Mahindra Bank recorded a 14 per cent decline in its net profit in the fourth quarter of FY 2025, which stood at Rs 3,552 crore due to high provisions and high operational expenses. The bank’s net interest income (NII) rose 5 per cent to Rs 7,284 crore as compared to the same quarter last year. Other income increased by 7 per cent to Rs 3,182 crore compared to the same quarter of the previous year.
Its net interest margin was 4.97 per cent in the fourth quarter of FY 2025 as against 5.28 per cent a year ago. The loan lapse was higher in the quarter on a annual basis, but the quarter was low. The debt hike was 13.5 per cent on an annual basis and 3.2 per cent on a quarterly basis amid corporate banking as well as a decline in credit cards. There has been a significant increase in personal loans, business loans and consumer loans after the ban is lifted.
According to the McWery Capital report, the management has indicated that the deficiency in lapse in the personal loan segment has begun. But the loan omission in credit card and microfinance (MFI book) is still at a high level. So, he hopes that the credit cost will remain high in the next two quarters.
(Disclaimer: Business Standard Private Limited has a majority stake of units controlled by Kotak Group)
First Published – May 5, 2025 | 10:53 PM IST
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