NIIs are expected to increase by 20% as a result of robust loan growth, according to Kotak Mahindra Bank's Q2 results preview

 NIIs are expected to increase by 20% as a result of robust loan growth, according to Kotak Mahindra Bank's Q2 results preview

Preview of Kotak Mahindra Bank's Q2 results: On Saturday, October 21, Kotak Mahindra Bank will release its July-September quarter results for the fiscal 2023–24 (Q2FY24) period. According to projections made by experts and top brokerage houses, the largest private sector lender is likely to record a successful quarter supported by increased net interest income (NIIs), robust loan growth, and net profit.

The bank's managing director (MD) alongside chief executive officer (CEO), Uday Kotak, resigned in September, three months ahead of schedule, and handed the reins to Dipak Gupta, who is now acting as interim CEO until December 31, 2023. This is the first quarterly earnings report since that time.

Growth projections by brokerages for the Kotak Mahindra Bank Q2 forecast -According to domestic brokerage company Prabhudas Lilladher, the bank's net profit would increase by almost 12.7% to 2,907 crore in the September quarter from 2,580 crore in the same quarter last year. The NIIs are anticipated to increase by approximately 20% to 6,107 crore from 5,099 crore in the same period last year.

"We anticipate solid loan growth of 5% sequentially. However, because of the larger EBLR linked portfolio, margins may decline significantly by 33 basis points (bps) sequentially to 5.18 percent. Gross non-performing assets (GNPAs) are likely to decline by 7 basis points, which would enhance asset quality, according to Prabhudas Lilladher.

-StoxBox analysts predicted that the bank's loan book will have solid growth in credit off-take since demand for all retail assets, including affordable homes, commercial vehicles, passenger cars, small and medium-sized enterprises, and even unsecured categories, is still strong. Analysts are bullish, nevertheless, given the bank's aim to maintain NIM above the 5% target in the present high-interest rate environment.

While margins may continue to contract, top brokerage company Motilal Oswal anticipates that Kotak Mahindra Bank's liabilities growth would continue to be solid in the second quarter of the current fiscal year. According to the brokerage, the bank would continue to maintain tight control over its slippages and credit expenses.

In Q2FY24, Kotak Mahindra Bank is anticipated to post respectable results, mostly as a result of the economy's solid loan expansion. However, due to the patchy monsoon during this quarter, there might be some effect on the agricultural component of its loan book. Due to the bank's new product, ActivMoney, which provides significant returns to its consumers, we anticipate the bank's NIM to be moderate,'' stated Shreyansh Shah, Research Analyst, StoxBox.

There are no issues with the bank's asset quality since it has a history of immediately and prudently recording provisions, which has consistently resulted in good credit costs and stable non-performing ratios. In terms of value, we think the bank is offered at a fair price,'' Shah said.

However, because of the uncertainty surrounding Uday Kotak's replacement, experts and traders are closely monitoring the bank's future plans. The Reserve Bank of India gave the private lender permission on October 19 to pay 537 crore for a 100% share in non-banking financing business Sonata financing Pvt Ltd. On the BSE, Kotak Mahindra Bank shares ended the day on Friday 1.80% higher at Rs. 1,769.55.