Kotak Mahindra Bank likely to post robust profit growth in Q1, asset quality to be stable

Kotak Bank has maintained its asset quality at a pristine 2 percent level (gross non-performing assets).

Kotak Mahindra Bank, country's third largest private sector lender by market capitalisation, is expected to report healthy year-on-year growth in profit and net interest income, with stable asset quality on sequentially in Q1.

Profit growth in Q1 could be up to 40 percent on fall in provisions, and net interest income over 20 percent compared to a year-ago with stable NIM and strong loan growth.

"Most metrics like business growth, CASA, NIMs and earnings will be strong, while we also don't see major hiccups in asset quality with credit cost close to 50-55bps," said Prabhudas Lilladher that expects 35 growth in profit and 22 percent in net interest income for the quarter YoY.

The brokerage expects gross non-performing assets at around 2.16 percent in Q1FY20 against 2.14 percent in Q4FY19 and 2.17 percent in Q1FY19.

Kotak Bank has maintained its asset quality at 2 percent level (gross non-performing assets).

Motilal Oswal expects the bank to report loan growth of around 22 percent YoY and deposit growth of around 19 percent YoY in Q1FY20. It said margins are likely to remain at around 4.4 percent in June quarter against 4.48 percent in the previous quarter and 4.3 percent year-ago.

CASA retention would be a key driver of NII and NIM, the brokerage said, adding with strong digital initiatives and fast-paced customer acquisition, fee income would be a key growth driver for the bank.

Motilal Oswal, which expects 33 percent growth in profit YoY, further said it factored in other income growth of around 8 percent in Q1FY20, driven mostly by healthy fee traction and expects the trend to continue.

Most brokerages expect pre-provision operating profit growth could be over 15 percent YoY.

Key issues to watch out for would be guidance on balance sheet growth, CASA and fee income growth; trend in customer acquisition post the Aadhaar verdict; GNPAs in the MSME segment; and update on the stake reduction.

MORE WILL UPDATE SOON!!