Earnings Outlook
Kotak Bank's Oct-Dec PAT seen 11% higher on year, flat QoQ
This story was originally published at 10:20 IST on 17 January 2025
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By Kshipra Petkar
MUMBAI – Kotak Mahindra Bank's net profit is seen rising 11.3% on year to INR 33.44 billion for the quarter ended December, as per the average of estimates from 14 brokerages. Sequentially, it is seen flat.
Declining asset quality and a slowdown in business growth may affect the bank's profitability, analysts said. The net profit is seen in the range of INR 32.17 billion-INR 34.72 billion for the quarter ended December.
"The bank may end up seeing a volatile quarter on asset quality with variance at play in MFI (microfinance) and unsecured portfolios. We will watch for related commentary," Elara Securities said in a report. As of Sept. 30, the gross non-performing ratio of the bank was at 1.49%, while the net non-performing asset ratio was at 0.43%. Nomura in its report said that it expects the credit cost to inch up due to a rise in delinquencies in the unsecured retail and microfinance segment. In Jul-Sept, the bank's credit cost was at 0.65%. The company will announce its earnings on Saturday.
Nuvama remains negative on Kotak Mahindra Bank due to expectations of higher slippages and slower growth. In Jul-Sept, fresh slippages of the bank rose to INR 18.75 billion from INR 13.14 billion a year ago. Analysts expect this number to go even higher in Oct-Dec. Nuvama Wealth Management expects the slippages to rise by 40% on quarter to INR 26.3 billion.
Consequently, the provisions made by the bank are also expected to rise in the quarter ended December, affecting the bottom line. In Jul-Sept, the bank reported provisions of INR 6.60 billion, higher compared to INR 3.67 billion a year ago.
On the income front, net interest income of the bank is seen rising 9.5% on year to INR 71.73 billion in Oct-Dec, as per the average of estimates by 14 brokerages. It is seen rising 2.2% on quarter. Analysts expect net interest margins to see mild moderation. The net interest margin was at 4.91% in Jul-Sept, and 5.22% in the December quarter a year ago. Emkay Global expects margins to fall by 3 basis points on quarter and 34 bps on year. Nomura in its report said that the margins are likely to fall for the bank due to a moderation in the current, savings account ratios. As of Sept. 30, the bank's CASA ratio was at 43.6%.
In the reporting quarter, analysts expect the bank to see a loan growth of 14% on year and a deposit growth of 15% as of Dec. 30. The bank's advances were up 17% on year to INR 4.19 trillion as on Sept. 30 and the deposits were up 15.1% on year to INR 4.61 trillion.
Analysts will remain watchful for any commentary by the management on the action taken by the Reserve Bank of India on the bank after identifying gaps in the bank's IT infrastructure. In April, the central bank restricted Kotak Mahindra Bank from issuing new credit cards and acquiring customers online. At 1001 IST, shares of Kotak Mahindra Bank traded 1.2% lower at INR 1,783.65 on the National Stock Exchange.
Following are the Oct-Dec earnings estimates for Kotak Mahindra Bank based on reports from 14 brokerage firms in descending order by the estimate of net profit:
| Brokerages | Net interest income (in INR mln) | Net Profit (in INR mln) |
| YES Securities (India) | 72,529.00 | 34,720.00 |
| Anand Rathi Share and Stock Brokers | 73,215.00 | 34,670.00 |
| JM Financial Institutional Securities | 71,418.00 | 33,987.00 |
| Motilal Oswal Financial Services | 71,355.00 | 33,788.00 |
| KR Choksey Research | 71,258.00 | 33,639.00 |
| Prabhudas Lilladher | 71,864.00 | 33,476.00 |
| Emkay Global Financial Services | 72,512.00 | 33,455.00 |
| Nomura Equity Research | 71,400.00 | 33,400.00 |
| Axis Securities | 71,540.00 | 33,340.00 |
| Sharekhan | 71,690.00 | 33,290.00 |
| Elara Securities (India) | 71,755.00 | 33,286.00 |
| Nirmal Bang Equities | 71,262.00 | 32,685.00 |
| Nuvama Wealth Management | 71,000.00 | 32,300.00 |
| Systematix Shares and Stocks (India) | 71,488.00 | 32,173.00 |
| Average | 71,734.71 | 33,443.50 |
End
Edited by Namrata Rao
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