EQUITY RESEARCH REPORT : KTKBANK (BSE)

3rd September 2021

NIM improves, weak other income and high provisioning weigh on profitability

NII grew by 7.4% YoY (-13.3% YoY in Q4FY21) led by decline in CoD. Interest income declined by -5.7% YoY, though the impact was offset by 47bps QoQ decline in CoD. NIM rose by 57 bps QoQ to 2.98% in Q1FY22 boosted by declined interest cost. Other income de-grew by -54.5% YoY on account of steep reduction in trading profits. C/I reduced to 48.9% (53.9% in Q4FY21) due to controlled OPEX. Provisioning remained elevated, growing 7.7% QoQ. KTK reported net profit of Rs106 cr as compared to Rs31 cr in Q4FY21 and Rs196 cr in Q1FY21.

Business growth remains weak

Advances de-grew by -4.5% YoY. On sequential basis, advances grew at modest 0.2% QoQ. During the quarter, retail (-1.2% QoQ) and MSME book (-0.2%) witnessed sequential contraction. While corporate book grew by 8.4% over the previous quarter. As per mgmt, the bank is witnessing good credit enquiries getting converted both in retail and mid corporate segments.  Deposits grew by 6.1% YoY while the growth in low cost deposits (CASA) remained strong at 14.1% YoY. CASA share stood at 30.8% as of Q1FY22.

Company Name

KTKBANK

Our Recommentation is to

Hold
CMP

63

Upside potential

14.3

Holding period

12 Months

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