Kotak Mahindra Bank Q3 preview: Profit to grow in double digits, NIM to stay steady

Kotak Mahindra Bank Q3 preview: Profit to grow in double digits, NIM to stay steady

NEW DELHI: Kotak Mahindra Bank is expected to report double-digit growth in profit and net interest income (NII), and seen reporting a steady net interest margin (NIM) for the December quarter. Loan growth is expected to moderate, with investors eyeing the management’s commentary on unsecured portfolios.

BoB Capital Markets has pegged the private lender’s profit at Rs 1,790.70 crore in the December quarter, as against Rs 1,595.90 crore in the corresponding period a year ago. NII is expected to rise 14.4 per cent to Rs 3,924.40 crore, from Rs 3,429.50 crore in the year-ago period. The pre-provisioning profit is seen rising 22 per cent to Rs 2,919 crore, from Rs 2,388 crore in the year-ago period.

“We expect loan growth to remain moderate while deposit accretion should hold strong. NIM is forecast to remain healthy. Commentary on the SME portfolio and unsecured business is a key monitorable,” BoB Capital Markets said.

Deposits for the quarter are seen rising 11.5 per cent to Rs 2,66,795 crore, said Nirmal Bang Institutional Equities. This brokerage sees loans & advances falling 1.9 per cent to Rs 2,12,609 crore. NIM is seen flat at 4.4 per cent on a year-on-year basis, and up 14 basis points on a quarter-on-quarter basis. Profit for the private bank is seen jumping 34.4 per cent to Rs 2,144 crore.

Revival in economic activity is seen leading to a sequential uptick in business. But with four months after the end of moratorium, proforma NPA numbers remain key to be watched, said ICICI Direct.

“Standstill on asset classification is expected to keep gross NPA ratio steady at 2.5-2.6 per cent, though proforma NPA numbers are expected to lead to 40 basis points increase in gross NPA. Steady advances at Rs 2.1 lakh crore coupled with stable margin at 4.5-4.6 per cent are seen leading to 15.6 per cent YoY growth in NII at Rs 3,965 crore,” the brokerage said.

Analysts said that anticipation of the creation of contingent provision in lieu of clarity on stress accretion is seen keeping provision elevated at 40 basis points of advances.

“Overall, steady traction in operational performance may keep earnings momentum healthy at 18 per cent YoY to Rs 1,856 crore,” ICICI Direct.

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