Kotak Mahindra Bank Q1 preview: Profit may rise up to 26%, NII growth seen in single digits

HDFC Institutions Equities is expecting the private lender to report a 26.2% increase in adjusted profit after tax year-over-year (YoY).PAT) at Rs 1,570 crore compared to a profit of Rs 1,244.40 in the previous quarter. Sequentially, it expected profits to fall 6.6%.

NII was recorded to increase by 5.9% year-on-year and sequentially to Rs 4,070 crore. Profit before provisioning increased by 12% over the same period last year (down 13.8% QoQ) to Rs 2,940 crore.

Analysts noted that the second wave led to major disruptions in the banking sector, limiting credit growth and asset quality across the industry. Restrictions related to account lockouts and banks’ risk aversion have led to single-digit systemic credit growth, they said in their earnings preview.

“The absence of a moratorium could lead to higher restructuring, but less overall impact on asset quality,” said Anand Rathi.

In the case of Kotak Mahindra Bank, Motilal Oswal Securities expect that comment around tension in SME books and other unsecured loans can increase the cost of credit. It expects loan growth to continue to be modest but believes asset quality could decline slightly, with total non-performing assets at 3.4%. The bank reported a total NPA of 3.4% in the March quarter and 2.7% in the year-ago quarter.

This broker expects Kotak Bank achieved a 25.6% year-on-year increase at Rs 1,563.40 crore. It shows NII up 7.7% year-on-year to Rs 4,012 crore. Deposit growth reached 9% YoY, while loan growth reached 11.1% YoY.

Kotak is expected to report a 10% increase in profit at Rs 1,368.90 crore. It shows NII up 4.5% year-on-year to Rs 3,900.50. NIM came in at 4.5% compared to 4.4% in the last quarter.

“We expect the loan book to contract quarterly compared with the previous quarter, but having credit will support margins,” it said.