Kotak Mahindra Bank Q1 net up 27 pct

(Reuters) - Private sector lender Kotak Mahindra Bank on Thursday posted a 27 percent growth in June quarter consolidated net profit led by higher loan growth and better asset quality.

The bank said its net profit in the June quarter rose to 4.16 billion rupees from 3.28 billion rupees a year ago. Its net interest income (NII) grew to 9.2 billion rupees from 7.25 billion a year ago.

Kotak, in which private equity Warburg Pincus LLC holds more than 9 percent, said its net interest margin -- a key gauge of profitability -- for the quarter-ended June fell to 5 percent from 5.4 percent a year ago.

Higher term deposit rates in the past few months coupled with a 50 basis points increase in savings deposit rate in May has pressured NIMs at Indian banks.

Earlier this week, bigger rival HDFC Bank posted a forecast beating 34 percent rise in net profit for the fiscal first quarter, but analysts voiced concerns about the future prospects of Indian banks in a rising interest rate environment.

Lenders led by the biggies State Bank of India and ICICI Bank saw robust growth in loan portfolios in the past several quarters in Asia's third largest economy. However, a series of interest rate hikes since March 2010 has dampened growth outlook for banks.

Credit at Indian banks grew 3.7 percent in the three months ended June compared with 5 percent in the same period a year ago, while deposits rose 5.5 percent, according to latest Reserve Bank of India (RBI) data.

The Indian economy grew at its slowest annual pace in five quarters in the March-quarter at 7.8 percent compared with a year ago.

Kotak Mahindra's consolidated advances grew 36 percent from a year ago to 447 billion rupees as of end-June while its net non-performing assets fell to 0.54 percent from 1.19 percent a year ago.

Shares of the lender, which the market values at nearly $8.1 billion, extended losses to more than 2 percent after the results. At 12.41 p.m., they were down 1.72 percent at 482.20 rupees.

The shares have risen 5 percent during the quarter outperforming a 3 percent fall in the benchmark index. The BSE bank index has fallen 3.6 percent in the period.