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Last Updated : Apr 16, 2013 04:46 PM IST | Source: Moneycontrol.com

Expect banks NIM to remain stable in Q4: Kotak Securities

Kotak Securities has come with its March`13 quarterly earning estimates for banking & NBFCS sector. The research firm expects fresh slippages to remain stable QoQ with positive bias for banks under their coverage.

 
 
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Kotak Securities has come with its March`13 quarterly earning estimates for banking & NBFCS sector. The research firm expects fresh slippages to remain stable QoQ with positive bias for banks under their coverage.

Muted earnings growth for banks under our coverage - private banking universe is likely to grow faster while PSU banks to witness subdued performance- During Q4FY13, net income for Banks under our coverage is expected to decline 1.1 percent YoY. Our private banking universe is likely to grow faster at 22.7 percent, while PSU banks under our coverage are likely to report subdued performance (decline of 13.4 percent YoY) on back of modest NII, higher credit costs and higher provisions for impending new wage settlement. NBFCs are expected to report healthy earnings (20.1 percent YoY) on back of healthy core earnings and stable credit costs. For Banks & NBFCs under our coverage, we expect NII growth of 9.1 percent YoY, with private banks growing at 22.4 percent YoY while PSU banks likely to report almost flat NII (3.2 percent YoY). During the same period, NBFCs core earnings are likely to witness healthy growth (14.7 percent) mainly aided by strong loan growth and stable margins (YoY).

Credit growth saw moderation; however, deposit mobilization continued to lag the overall credit growth, leading to rise in the C/D ratio- The credit growth has moderated marginally to 15.5 percent YoY (as on March 15, 2013) as compared to number reported during three previous fortnights, when it was hovering at 16 percent plus mark. We expect loan growth to come at ~15 percent for FY13, marginally lower than RBI's revised credit growth projection of 16 percent on back of subdued credit off-take on corporate segments. Deposit mobilization continued to lag the overall credit growth - 13.8 percent YoY (as on March 15, 2013) which has led to rise in the C/D ratio to 77.8 percent at the end of March 15, 2013, as compared to 75-76 percent seen during previous two quarters.

Outlook:

  • During Q4FY13, net income for Banks under our coverage is expected to decline 1.1 percent YoY - private banks are likely to grow faster at 22.7 percent, while PSU banks are likely to report subdued performance (decline of 13.4 percent YoY) NBFCs are expected to report healthy earnings (20.1 percent YoY) on back of healthy core earnings and stable credit costs.
  • Credit growth continued to moderate to (15.5 percent YoY as on March 15, 2013) while deposit mobilization continued to lag the overall credit growth - 13.8 percent YoY (as on March 15, 2013) which has led to rise in the C/D ratio.
  • Expect NIM to remain stable QoQ with negative bias. We expect strong treasury profit during Q4FY13 as yield curve movement was volatile during the quarter. However, we are forecasting subdued core fee income on back of muted loan growth.
  • We expect fresh slippages to remain stable QoQ with positive bias for banks under our coverage. However, addition to restructured portfolio is likely to be lumpy with one large account from wind power segment is likely to be reported during Q4FY13. Hence, banks having exposure to this particular account are likely to report higher provisions. We would be closely watching the revised restructured portfolio as banks would start reporting under new guidelines from this quarter.
  • Top Picks: ICICI bank, HDFC Bank and IDFC.

Company

Net Interest Income (Rs mn)

PAT (Rs mn)

Q4 FY13 Q3 FY13QoQ (%) Q4 FY12 YoY (%)Q4 FY13 Q3 FY13QoQ (%) Q4 FY12 YoY (%)
Allahabad Bank13,77113,3023.512,8846.93,3693,1088.44,002-15.8
Andhra Bank9,9409,7142.39,1398.83,0772,57119.73,397-9.4
Axis Bank26,28224,9485.321,46122.514,56113,4728.112,77314
BOB29,91228,4095.327,9746.911,77410,11616.415,182-22.4
HDFC Bank41,29437,9898.733,88321.918,91318,5911.714,53130.2
ICICI Bank38,00534,9908.631,04822.423,29622,5023.519,01822.5
Indian Bank12,05211,4345.410,82611.33,3283,3060.73,454-3.7
IOB14,26713,8163.313,4066.42,4101,165106.95,288-54.4
J&K Bank6,4795,94295,16125.52,6312,894-9.12,08126.4
PNB38,79837,3333.933,10017.213,60413,0564.214,241-4.5
SBI113,004111,5451.3117,038-3.437,78933,96111.340,503-6.7
Union Bank19,20818,9151.618,7662.45,8633,02493.97,732-24.2
HDFC18,90014,75728.116,80812.415,50011,4013613,26116.9
IDFC6,7506,5602.95,97013.14,5804,5201.33,31938
M&M Financial6,3305,61212.85,08924.42,8182,00240.72,27723.8
Shriram Transport9,2408,9473.38,05614.73,4593,46003,08112.3

 

 

 

 

 

 

 

 

 

 

 

 

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First Published on Apr 16, 2013 04:46 pm
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