Private sector lender Kotak Mahindra Bank's profitability is likely to improve due to better operating performance in quarter ended December 2015.
According to analysts polled by CNBC-TV18, standalone profit is seen rising 10.6 percent sequentially to Rs 630.1 crore and net interest income may increase 2.1 percent to Rs 1,713 crore during the quarter. Numbers will be announced on January 18.
Quarter-on-quarter numbers are comparable but year-on-year earnings are not comparable due to ING Vysya merger. Standalone is pure banking operations, including ING Vysya Bank's numbers while consolidated numbers include subsidiaries such as Kotak Prime, Capital markets business, insurance etc.
In previous quarter, the bank had said integration cost should be completed by FY16-end and savings should flow FY17 onwards.
Analysts feel integration cost is likely to be maintained for December quarter, which was at Rs 12 crore in Q2FY16 against Rs 63 crore in preceding quarter.
Kotak Mahindra Bank has maintained its guidance of 15-20 percent loan growth and consolidated net interest margin of 4.1-4.3 percent for FY16. Hence, analysts say loan growth is likely to sustain earlier momentum. In Q2, standalone advances grew 8 percent and consolidated 7.3 percent on sequential basis.
According to CNBC-TV18 poll, gross non-performing loans (GNPL) may remain manageable but additional provisions would be watched out for. Additional provision for Q2 was Rs 238 crore for combined book against Rs 305 crore in Q1.
Other income (non-interest income) may remain healthy led by fee income. Other income increased 32 percent in Q2 with fee income growth of 40 percent Q-o-Q.