Kotak Mahindra Bank's Q2 results are expected to reveal a robust year-over-year (YoY) growth in net profit and net interest income (NII), even though sequential declines are anticipated. The bank's profit is predicted to grow between 17-19% YoY, while NII might see an increase of up to 24% YoY. According to InvestingPro, the bank's revenue growth has been accelerating, which aligns with these predictions.
Sequential loan growth could be around 5-6%, with asset quality improving due to decreased non-performing assets (NPAs). In Q1, the bank reported a net profit of Rs 3,452 crore, marking a rise of 67%, and NII of Rs 6,234 crore, up by 33%. This is consistent with the InvestingPro Tip that highlights the bank's consistently increasing earnings per share.
On the flip side, Q2 might observe a subdued NII growth at 1% quarter-over-quarter (QoQ) and profit after tax (PAT) decline by 11%. Factors contributing to this include a margin decline of 16 basis points and a drop in Core Pre-Provision Operating Profit (PPOP) by 7% QoQ. This could be a result of the bank's quickly burning through cash, as noted by InvestingPro.
The External Benchmark Lending Rate (EBLR) linked portfolio might lead to a sharp margin fall. Slippages and credit costs are expected to remain controlled, but prudential provisioning may increase. Liability growth is anticipated to be healthy, with the cost of deposits slightly impacting NII growth.
Sequential fee income growth is expected to match loan growth. Operational expenditure (Opex) growth will slightly lag loan growth due to the idiosyncratic growth trajectory. Provisions are projected to be marginally higher sequentially. As a prominent player in the Banks industry, according to another InvestingPro Tip, Kotak Mahindra Bank's performance can be a key indicator of the overall health of the sector.
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