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Banking sector Q3FY23 report card: ICICI Bank’s NIM at all time high & robust ROA for Kotak Bank

earnings | Jan 23, 2023 8:49 PM IST

Banking sector Q3FY23 report card: ICICI Bank’s NIM at all-time high & robust ROA for Kotak Bank

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It is turning out to be a good quarter for banks so far as big banks like Kotak Mahindra Bank and ICICI Bank reported record high margins in the third quarter. Midcap banks like IDFC First Bank and RBL Bank also posted strong numbers. The net interest margin (NIM) for all the lenders have been robust and that is aiding in terms of the P&L momentum in Q3 FY23.

It is turning out to be a good quarter for banks so far as big banks like Kotak Mahindra Bank and ICICI Bank reported record-high margins in the third quarter. Midcap banks like IDFC First Bank and RBL Bank also posted strong numbers. The net interest margin (NIM) for all the lenders have been robust and that is aiding in terms of the P&L momentum in Q3 FY23.

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For ICICI Bank, the net interest margin was an all-time high at 4.65 percent and they continue to outperform HDFC Bank on various parameters. Asset quality, the gross NPA and net NPA ratio one of the best in last eight years or 32 quarters. In terms of P&L they have beaten the CNBC-TV18 poll estimate both on an net interest income (NII) and profit after tax (PAT).
Kotak Mahindra Bank, the net interest margin is one of the highest that you are seeing since Q2 FY15. It has come in at 5.47 percent. Deposit growth quarter-on-quarter at about 6 percent level has actually gone down well with the street. Robust ROA or return on asset which is close to 2.50 percent both in terms of NII and PAT it is a beat on the CNBC-TV18 poll.
Bandhan Bank, the asset quality has surprised positively given the fact that it has remained stable and improved. So gross NPA ratio has improved, net NPA ratio has remained stable.
Brokerages are upbeat on Bandhan Bank given that they say 90 percent of the stress comes from the bank's known stress portfolio. Collection efficiencies back to pre-COVID levels. The SMA book and the unprovided stress are actually down on a sequential basis and valuations are attractive and the stock can re-rate if at all, they move towards the ROE of 20 percent level so across brokerages, they have a buyer or overweight rating and target price ranging from Rs 320 to 350.
Canara Bank, the gross NPA ratio is the lowest in the last seven years or 28 quarters. Net NPA ratio is the lowest in the last 30 quarters or more than seven and a half years. Return ratio is one of the best return ratios for Canara Bank in the last eight years given the fact that ROE has now crossed the 20 percent mark for the quarter. Annualised credit cost at a mere 0.9 percent is the lowest in the last 30 quarters and annualised slippage ratio coming in at 1.5 percent is the lowest in the last eight quarters. So in terms of P&L, both the NII and PAT is a beat on CNBC-TV18 poll.
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