By Siddhi Nayak
MUMBAI (Reuters) – India’s Kotak Mahindra Bank has appointed Grant Thorton Bharat as external auditor for its IT systems, months after the central bank (RBI) banned the bank from onboarding new customers digitally, its chief executive said on Saturday.
The scope of the audit has been finalised with the RBI and Kotak Mahindra Bank has submitted timelines for the process to the regulator, Ashok Vaswani told reporters in a conference call.
The bank has “bolstered” its internal technology team with resources from Accenture, Infosys, Oracle and Cisco, he said.
In April, the RBI asked Kotak Mahindra Bank to stop onboarding customers digitally and issuing credit cards due to gaps in its IT infrastructure.
Kotak had earlier said on Saturday that its net profit for the April-June quarter rose 81 percent from the same period last year, due to a one-time gain of 35.2 billion Indian rupees ($420.43 million) from the sale of a stake in its general insurance arm to Zurich Insurance Company in June.
The private lender’s standalone net profit (excluding subsidiaries) rose to Rs 62.5 billion in the first fiscal quarter from Rs 34.52 billion in the year-ago period.
According to LSEG data, this amount was significantly higher than analyst estimates of Rs 37.57 billion.
Kotak’s net interest income, the difference between interest income and interest payments, rose 10 percent year-on-year to Rs 68.42 billion.
Net interest margin (NIM), a key indicator of banks’ profitability, declined to 5.02% in the quarter from 5.57% in the year-ago period and was also lower than the 5.28% in the January-March quarter.
Indian banks are trying to finance rising credit growth through deposits, which is putting pressure on their margins.
Kotak’s NIMs have also been affected because the company has been unable to further expand its high-yield credit card book due to the RBI’s order, Chief Financial Officer Devang Gheewala said at the same conference.
Private lenders’ loans rose 20% during the quarter, while deposits grew 21%.
The gross non-performing assets (NPA) ratio, a key indicator of the quality of lenders’ assets, stood at 1.39 percent at the end of June, unchanged from the previous three months.
The bank is seeing signs of stress in its microfinance portfolio, particularly in certain states, as well as in its credit card business, Vaswani added.
(1 US dollar = 83.7240 Indian rupees)
(Reporting by Siddhi Nayak; Editing by Tom Hogue, Alexandra Hudson)
