Kotak Mahindra Bank is expected to report a double-digit growth in net profit for the quarter ended December, led by strong interest income, healthy loan growth, lower credit costs, and stable asset quality.
The private sector lender’s net profit for the quarter is seen rising 15.3% year-on-year (YoY) to Rs 3,219 crore, and net interest income is likely to grow by nearly 14% YoY to Rs 6,416 crore, the average of estimates given by 12 brokerage firms showed.
Sequentially, the growth is likely to have slowed down sharply, with net profit seen rising 0.9% and net interest income about 2%.
The lender is scheduled to release its quarterly earnings on Saturday.
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Here’s summarising analysts’ expectations on the third quarter earnings scorecard front:
Nuvama Institutional Equities
Given the low base of unsecured loans for Kotak and lower than peers’ CD ratio, we estimate the bank to continue with its strong growth in Q3 FY24. We expect 6% QoQ/19% YoY growth in loans and 4% QoQ/21% YoY growth in deposits.
However, Kotak’s deposit franchise is weaker than the top three private banks. As such, the risk of slower-than-expected deposit growth, in turn, leading to slower loan growth is high for this quarter given soft business updates from other banks.
Management had pointed to a negative one-off of 14-15 bps in NIM in Q2FY24. We anticipate NII growth of 2% QoQ.
KRChoksey Shares
We expect strong loan growth of 18.8% YoY, led by healthy growth in the retail segment across all the segments. The deposits are expected to grow by 20.5% YoY, with an increasing contribution from its new product segment, ActivMoney.
It is expected that the CASA ratio will remain relatively stable sequentially at 48.0%. NII is expected to grow by 16.6% YoY, with steady margins for the quarter. The cost-to-income ratio is expected to be around 45.9%, as against 50.3% in Q3FY23.
We expect operating profits to grow by 26.5% YoY, led by healthy operating income with improving business momentum. Credit costs will remain lower with stable asset quality.
Thus, the operating performance is expected to flow down to the net profit level by delivering a growth of 20.7% YoY and 5.6% QoQ.
Axis Securities
Business growth momentum is expected to sustain, growth in the unsecured portfolio will be watched out.
Margin contraction may continue, so expect NIMs to contract by 10-15 bps. Cost ratios to remain stable supporting operational profitability. Stable credit costs are likely to aid earnings.
Asset quality is expected to remain steady. Key monitorables will be commentary on NIMs and growth outlook, especially the growth trajectory hereon in the unsecured book.
Dolat Capital
Loan growth is likely to sustain at 4% QoQ/18% YoY. NIMs may decline by 20 bps QoQ, led by higher cost of funds. Slippages and credit costs to be 2% and 50 bps respectively, with seasonally higher agri slippages in Q3. Decline in NIM and higher opex may limit PAT growth at 15% YoY. RoAs to sustain at 2.2%.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
