Net interest margin (NIM) is a ratio that defines a bank’s profitability. It quantifies the difference between the interest revenue earned on loans and the interest paid on deposits. A higher NIM often suggests that the Bank is more profitable.
Bank’s net interest margin can be influenced by multiple variables, the most important of which are supply and demand. If there is a high demand for savings accounts relative to loans, the net interest margin decreases because the bank is anticipated to pay more interest than it earns.
Listed below are 2 Nifty 50 stocks that reported a Higher Net Interest Margin in March FY23.
Kotak Mahindra Bank Ltd
Kotak Mahindra Bank is an Indian banking and financial services company headquartered in Mumbai. Bank offers financial services for corporate and retail customers in the areas of personal finance, investment banking, life insurance, and wealth management. It is India’s third-largest private sector bank by market capitalization of ₹ 3,83,426 Cr.
Bank Net Interest Income (NII) for FY23 increased to ₹ 21,552 crore, from ₹ 16,818 crore in FY22, up 28% YoY, and for Q4FY23 increased to ₹ 6,103 crore, from ₹ 4,521 crore in Q4FY22, up 35% YoY. Net Interest Margin (NIM) is on an upward trajectory of 5.33% for FY23 from 4.78% in FY22.
The shares of Kotak Mahindra Bank Ltd were trading at the price of ₹ 1,935.85 on Friday’s session. The stock has experienced positive movement in three months with a return of 12.51 percent.
As per Consolidated financials of the previous quarter, their interest earned has increased 9 percent from ₹ 11,011 crores in Q3 to ₹ 11,981 crores in Q4. Similarly, the net profit significantly increased from ₹ 3,959 crores to ₹ 4,529 crores in Q4.
Profitability ratios have improved in recent years.ROE has increased from 12.50 percent in FY 21-22 to 13.34 percent in FY 22-23, while ROCE has increased from 3.25 percent to 3.41 percent during the same time period.
IndusInd Bank Limited
IndusInd Bank Limited was founded in 1994. It is one of India’s leading leasing financing and hire purchase businesses. The bank offers a comprehensive range of banking products and financial services to corporate and retail clients and treasury services and the bank has implemented multi-channel infrastructure technology to serve commercial clients.
Net Interest Income (NII) for FY23 grew by 17% to ₹4,669 crores in FY23 from ₹3,985 crores in FY22. Net interest margin improved to 4.28% as compared to 4.20% in FY22.
The shares of IndusInd Bank Limited were trading at the price of ₹ 1,290 on Friday’s session. The stock has experienced positive movement in the last year with a return of 38.97 percent, The bank has a market capitalization of ₹ 1,00,106 Cr.
As per consolidated financials of the previous quarter, their interest earned has increased 6 percent from ₹ 9,457 crores in Q3 to ₹ 10,020 crores in Q4. Similarly, the net profit increased from ₹ 1,963 crores to ₹ 2,043 crores in Q4.
Profitability ratios have improved in recent years. ROE has increased from 10.06 percent in FY 21-22 to 13.53 percent in FY 22-23, while ROCE has slightly declined from 3.36 percent to 3.27 percent during the same time period.
Written by Omkar C
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