Q2FY23 Preview: Kotak Mahindra Bank: NII seen at Rs48.4 billion, PAT at Rs24.7 billion

21 Oct 2022 , 08:03 AM

Result date: 22^nd October, 2022
Recommendation: Add
Target price: Rs2,020

Kotak Mahindra Bank is expected to post strong loan growth of 26% over the year-ago quarter and 6% over the previous quarter. Traction in unsecured loans is the key driving force behind the loan growth. Analysts at IIFL Capital Services expect the Bank’s deposits to grow 14% on a year-on-year basis and 5% sequentially. The Net Interest Income or NII should grow 20% over the year-ago quarter.

Sequential improvement in yields could lead to better Net Interest Margin during the quarter. Solid asset quality and negligible credit costs will rub off favorably on the Bank’s Profit After Tax (PAT). High base effect of the June 2022 quarter, wherein a one-off charge had pulled down the consolidated PAT, could augur well for the Bank in Q2. Consequently, consolidated PAT could grow 26% sequentially (16% over the year-ago quarter) to Rs34.6 billion.

Important management insights to watch out for:

• Credit demand across key segments
• Asset quality trends in SME, unsecured loans
• Margin drivers
• Outlook on credit cards business

Rs. Billion	September 2022 estimates	QoQ change	YoY change
Net Interest Income	48.4	3%	20%
Total Income	68.4	15%	17%
Pre-Provisioning Operating Profit	34.7	25%	11%
Provisions	1.8	NM	(58)%
Profit After Tax	24.7	19%	21%
Loans	2,970	6%	26%
Deposits	3,323	5%	14%

Source: Company, IIFL Research