Kotak Mahindra Bank Q1 preview: Stable asset quality, NII growth may boost earnings

Key Highlights: 

• Kotak Mahindra Bank's bottom-line at Rs 3,411.50 crore  by end of FY17
• KMB's NII rose by 17.76% in FY17
• Gross NPAs stand at 2.36% till now 

Kotak Mahindra Bank (KMB) will announce its first quarter ended June 30, 2017 (Q1FY18) results on July 20, 2017. 

Nilesh Parikh, Kunal Shah and Prakhar Agarwal, analysts at Edelweiss Financial Services said, "Growth momentum has been softer post integration, we expect some traction on growth this quarter."

Analysts at Motilal Oswal said, "We expect the standalone bank to report 16% loan growth and 17% deposit growth in 1QFY18. NIM is likely to shrink ~5 basis points QoQ, but improve 5 basis points YoY."

Overall NII growth is seen at 16% yoy by Motilal Oswal. 

Kajal Gandhi, Vasant Lohiya and Vishal Narnolia, analysts at ICICI Securities said, "Credit traction is seen to remain healthy at 14% YoY, led by corporate and retail segment. Operational performance is expected to remain steady. With broadly stable margins, NII growth is seen at 15% YoY at Rs 2123 crore."

On asset quality front, the trio at ICICI said, "Slippages are anticipated to remain steady and asset quality is expected to remain stable. GNPA ratio is seen remaining broadly at 2.6-2.7%."

Motilal Oswal report said, "We expect asset quality to remain stable, with GNPA at 2.65% and NNPA at 1.2%, led by a high provision coverage ratio."

Gross non-performing assets (GNPA) has been mostly stable in FY17 at 2.59%, just 23 basis points higher compared to 2.36% in the corresponding period of the previous. 

Also net-NPA has been at 1.26% (valuing up to Rs 1,718.07 crore) during FY17 versus 1.06% (Rs 1,261.96 crore) in FY16. 

Motilal Oswal report said, "With strong digital initiatives, fast-paced customer acquisition and merger synergies from eIVBL, fee income would be a key growth driver for the bank. We factor

in other income growth of 16% in 1Q, driven mostly by healthy fee traction and expect an improving trend in the coming quarters."

On yoy basis the net profit of Kotak Mahindra Bank is seen at Rs 919 crore, up 23.85%, how down by 5.88% on quarter-on-quarter (QoQ) basis. 

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