According to the analysts at the brokerage, earnings
will be impacted to some extent as Q4FY20 is the strongest quarter. While they see steady growth in retail deposits, traction in corporate deposits would have to be monitored.
“On asset quality, incremental stress pool addition would be key monitorable. The bank may shore up provisioning owing to stress on asset quality emanating from Covid-19 outbreak,” they say.
The brokerage pegs the bank’s net profit at Rs 1,204.2 crore, a sequential drop of 31 per cent from Rs 1,757 crore logged in the December quarter of FY20. On a year-on-year (YoY) basis, the drop could be 20 per cent from Rs 1,505 crore clocked in Q4FY19.
Unlike Edelweiss Securities, this brokerage sees a much sharper erosion in the bank’s net profit due to elevated provisioning and credit costs for the under review.
They expect the PAT to sink 68 per cent quarter-on-quarter (QoQ) and 62.5 per cent YoY to come in at Rs 564.6 crore. That apart, they foresee the operating profit at Rs 5,163 crore, down 10 per cent QoQ, from Rs 5,743 crore clocked in Q3FY20. However, on a YoY basis, this would be a 3 per cent expansion.
Motilal Oswal Financial Services
Analysts at MOFSL believe the Mumbai-based bank’s credit cost may stay elevated led by higher slippages. Besides, asset quality could witness some pressure along with modest loan growth.
They estimate the gross non-performing asset (GNPA) ratio at 5.2 per cent for Q4FY20, up 20 bps from 5 per cent in Q3FY20. The Net NPA (NNPA) ratio, meanwhile, is seen rising 10 bps to 2.2 per cent from 2.1 per cent in Q3FY20.
Kotak Institutional Equities
The brokerage sees the loan book growing at 15 per cent YoY with a greater focus on retail lending. Besides, they expect the net interest margin (NIM) to remain unchanged at 3.6 per cent led by loan composition and funding costs.
They peg the net interest income (NII) growth at 16 per cent YoY at Rs 6,634.1 crore in the recently concluded quarter. Sequentially, the income may grow only 3 per cent. In Q3FY20, NII was Rs 6,452.9 crore, while the same was Rs 5,705.6 crore in Q4FY19.
“We expect slippages of around Rs 5,000 crore (3.5 per cent of loans) mostly from 'below investment grade book'. We expect an unchanged gross NPL and below investment grade loan portfolio,” they wrote in their earnings
preview note. The bank had slippages worth Rs 6,214 crore in Q3FY20.
They estimate provisions at Rs 4,424.4 crore in Q4FY20, up 63.2 per cent YoY and 27.5 per cent QoQ.