However, margins are likely to have contracted due to pricing competition in incremental loans.
The private sector lender’s net profit is seen rising nearly 28% year-on-year (YoY) to Rs 9,662 crore, according to the average of estimates given by nine brokerages.
NII or net interest income, the difference between interest earned and interest expended, is likely to grow 24% YoY to Rs 18,286 crore, the estimates showed.
The country’s second-largest private sector lender is scheduled to report its earnings on Saturday.
Here’s a summary of the analysts’ expectations from the bank’s earnings report:
Prabhudas Lilladher
Expect NII to de-grow by 2.6% QoQ, even as loan growth is seen at 4% since NIM’s decline of 35 bps QoQ is more due to a faster rise in the cost of funds.
GNPAs are set to improve by 8 bps QoQ, whereas credit costs are likely to remain flattish.
Nuvama Institutional Equities
Loan growth is anticipated at 4% QoQ. NIM will likely decline sharply by 17 bps QoQ, but this is well known. Lower NII will be partly offset by seasonally higher fees in Q2 and flat employee expenses QoQ, after the sharp rise in Q1FY24. With margin pressure, core PPOP is likely to be flat QoQ.
Kotak Institutional Equities
Expect PPOP to grow at 20% YoY as NIM is seen reversing from peak levels. Loan growth to be healthy at 16%, led by a contribution from all segments. Model NIM to decline 25 bps QoQ to 4.3%. Expect provisions to remain low as slippages would be lower given the current economic environment.
Building slippages of 2% (Rs 50 billion), key concerns would be a reversal of NIM, as the cost of funds is starting to move up sharply for the sector, especially with slower CASA growth.
Motilal Oswal Securities
Expect loan growth to remain healthy, led by retail and SME segments. Expect credit costs to remain under control, supported by adequate contingency buffers.
The margin trajectory is likely to compress. Traction in opex and deposit growth are likely to be the key monitorables.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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