On a consolidated basis, the bank's advances grew 21 per cent to Rs 86,058 crore. Consolidated net interest margin was at 4.7 per cent during the quarter under review, down from 4.9 per cent in the year-ago period.

Dipak Gupta, joint managing director, Kotak Mahindra Bank, said the margins were down as cost of funds had not come down as expected. “Moreover, we are also making investments in growing the business; that has also impacted margins,” he added.

For the entire financial year, the management has given a forecast of around 4.5 per cent on the margin front. The bank's standalone net profit during this period was up 37 per cent at Rs 465 crore.

The private lender's standalone net interest income, or the difference between interest income and interest expense, was at Rs 1,060 crore, up 16 per cent from a year ago.

According to the management, the growth in demand from the corporate sector has helped boost the overall growth. “We have seen high growth on the corporate side, which is a combination of working capital and non-fund based loans. We can also say that some projects have started moving and we have seen that across sectors. However, demand for commercial vehicle hasn’t picked up, though delinquency rate has been low. But in the fourth quarter, we will also factor in credit demand for coal and spectrum auction. On the retail side also, we can say there are early signs of improvement,” said Gupta.

Other income, which includes fees, commissions, income from treasury etc, inched up 65 per cent to Rs 494 crore in the December quarter of FY14 from Rs 300 crore in the third quarter of FY13. This was mainly on account of treasury gains, mutual fund distribution income and forex gains.

The bank had recently announced a merger with ING Vysya Bank in an all-stock deal.

“The shareholders of Kotak Mahindra Bank and ING Vysya Bank have approved the scheme of amalgamation at their respective extra-ordinary general meetings held on January 7, 2015. Other approvals are awaited,” the lender said in a statement. The entire process is likely to be completed in the next two to three months.

Kotak Mahindra Bank's standalone advances increased 22 per cent on a year-on-year basis to Rs 64,641 crore, while deposits grew 34 per cent from a year earlier to Rs 73,066 crore at the end of December 2014. Low-cost current account savings accounts (CASA) deposits were up 42 per cent during this period.

The lender’s net non-performing asset ratio improved to 0.97 per cent at the end of the quarter from 1.1 per cent a year ago. Restructured loans, which were considered standard, stood at Rs 159.1 crore, or 0.25 per cent of the bank's net advances.

This was on account of a write back of Rs 56 crore in the quarter under review. No restructuring of assets was done in the quarter.

Kotak Mahindra Bank closed the quarter with a capital adequacy ratio of 17.7 per cent according to Basel-III norms. The tier-I ratio was 16.7 per cent. Kotak Mahindra Group has received permission from the Reserve Bank of India (RBI) and an in-principle approval from the Insurance Regulatory and Development Authority of India for its entry into the general insurance business. “The subsidiary has since been incorporated and is in the process of applying and completing the registration process,” the bank said.

Kotak Mahindra Investments’ profit after tax doubled from a year ago to Rs 24 crore during the quarter. Kotak Securities reported a net profit of Rs 60 crore for the October-December 2014 period, compared to Rs 46 crore a year earlier.

The bank is yet to take a call on reducing base rate after RBI reduced repo rate by 25 basis points last week. “The bank has not taken call on lowering base rate after RBI’s rate cut. Lower short-term rates don’t lead to tinkering with deposit rates,” said Gupta.