Private sector lender Kotak Mahindra Bank Ltd., on January 20 registered a 23.62 percent year-on-year growth in Q3FY20 profit at Rs 1,595.9 crore.

Asset quality weakened sequentially and year-on-year loan growth was at a multi-quarter low.

The profit growth was driven by higher other income (up 37.34 percent YoY), operating income (up 23.20 percent YoY) and lower tax cost (down 48.78 percent YoY), but was limited due to higher employee cost.

"During this quarter, employee cost included non-recurring charge towards pension obligation of around Rs 200 crore mainly due to change in annuity rate, DA, etc," the bank said in a BSE filing.

Net interest income, the difference between interest earned and interest expended, grew by 7 percent year-on-year to Rs 3,430 crore with net interest margin at 4.69 percent (against 4.31 percent YoY and 4.61 percent QoQ).

Loan growth at 10 percent YoY was at a multi-quarter low due to commercial vehicle and construction equipment.

Asset quality weakened with gross non-performing assets (NPA) as a percentage of gross advances rising 14bps QoQ to 2.46 percent and net NPA climbing 4bps QoQ to 0.89 percent in Q3FY20.

Provisions and contingencies for the quarter at Rs 444 crore increased by 8.8 percent compared to Rs 408 crore in the previous quarter. The bank had reported provisions write-back of Rs 32.30 crore in December quarter 2018.

Provision coverage ratio (ex-technical write-off) improved to 64.4 percent during the quarter, from 64 percent in previous quarter.

The bank's consolidated profit increased by 27 percent YoY to Rs 2,349 crore and net interest income rose by 17.6 percent to Rs 4,441.6 crore in quarter ended December 2019.