Kotak Mahindra Bank share rises 2% after lender cuts promoter stake in line with RBI norms

Share price of private sector lender Kotak Mahindra Bank gained nearly 2% intra day after the bank announced it has achieved compliance with the RBI norms in respect of dilution of promoter Uday Kotak's shareholding. Following the announcement, Kotak Mahindra Bank share price rose up to 1.83% to Rs 1,385 against previous close of Rs 1,360 on BSE.

Kotak Mahindra Bank share trades higher than their 5, 20 and 50 day moving averages but lower than 200-day moving averages. Kotak Mahindra Bank shares have gained 3.07% in the last week. However, the stock has fallen 11% in one year and 19% since the beginning of this year. The share has gained 4.39% in six days. The large cap share has lost 11.03% in one year and fallen 19% since the beginning of this year.

Total 1.02 lakh shares changed hands amounting to Rs 13.86 crore.  Market cap of the firm rose to Rs 2.70 lakh crore.

"In relation to the matter of dilution of promoters' shareholding in the bank, the bank has achieved compliance with the promoter shareholding reduction requirement set out in the Reserve Bank of India's letters dated January 29, 2020 and February 18, 2020 on August 10, 2020, within the timeline prescribed by the RBI," the bank said.

Earlier in February this year, the bank informed that RBI had given its approval in relation to dilution of promoters' shareholding in the bank.

Before this, on January 30, 2020, billionaire Uday Kotak-led lender and the banking regulator RBI had reached an agreement over the promoter's stake dilution, as the matter had reached the court.

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As a consequence to that, Kotak Mahindra Bank had also informed that it was moving towards withdrawing a case it had filed against the RBI in the Bombay High Court over the matter.

In last quarter, the bank reported a 8.5 per cent fall in its standalone net profit to Rs 1,244.45 crore for Q1 against net profit of Rs 1,360.20 crore in the year-ago period. However, Q1 FY21 net profit remained nearly flat when compared sequentially from Rs 1,266.60 crore in March quarter.

Total income (standalone) fell to Rs 7,685.40 crore in April-June quarter of 2020-21 compared with  Rs 7,944.61 crore in the same period of 2019-20, Kotak Mahindra Bank said.

The bank's provisioning for bad loans and contingencies were raised substantially to Rs 962.01 crore for the quarter ended June 2020 as against Rs 316.76 crore.

However, provisioning declined on a quarter-on-quarter basis from Rs 1,047.47 crore provisioning and contingencies for three months ended March 2020.

On the asset quality front, the lender witnessed a slight deterioration, as the gross non-performing assets (NPAs) rose to 2.70 per cent of the gross advances as on June 30, 2020 from 2.19 per cent in the year-ago period.

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