Kotak Bank Q3FY22 Preview: PAT likely to grow at 11-16% as per estimates by two brokerages; NII growth seen at 9.5-10%

Kotak Mahindra Bank is expected to report healthy third quarter earnings for the financial year 2021-22 (Q3FY22) on Friday. Both the net profit and net interest income (NII) of the bank is likely to grow year-on-year (YoY) basis, with slight improvement in asset quality, according to estimates by two analysts. 

Brokerage firm Motilal Oswal sees the net profit rising by 11 per cent YoY to Rs 2060 crore for the December-ended quarter of FY22 while net interest income may grow by 10 per cent to Rs 4260 crore in Q3FY22. The bank had reported Rs 1850 crore and Rs 3880 crore profit and NII in Q3FY21. 

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Motilal Oswal also sees gradual sequential improvement in asset quality as gross non-performing assets (NPA) may come at 3 per cent and net NPA to remain as same as of last quarter at 1.1 per cent.  

“Loan growth to see strong traction quarter-on-quarter and liability franchise to remain strong; lower cost of funds to result in stable margins around 4.5 per cent. Commentary around stress in SME book and other unsecured loans; credit costs could remain higher,” the brokerage said 

Meanwhile, ShareKhan estimates 16.3 per cent and 9.5 per cent YoY growth in profit and NII to Rs 2156 crore and Rs 4242 crore in Q3FY22, respectively.  

“The net interest margins (NIM) is likely to be stable at the Q2FY22 levels and the contribution from the treasury yields is expected to decline further during the quarter,” ShareKhan said in Q3 preview.    

Both the brokerage houses see an upside of between 21-25 per cent in the share price of Kotak Bank, however, Motilal keeps a Neutral rating, while ShareKhan gives Buy call on the counter. 

The cascading effect of Axis Bank Q3 and outlook upgrade was seen on majority of banking heavyweights such as SBI, Kotak Bank and IndusInd Bank. In this Kotak Bank on Thursday closed over 2 per cent higher to Rs 1889.5 per share on the BSE, as against 1 per cent fall in the BSE Sensex.