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Informist, Thursday, Jul 18, 2024

By Kshipra Petkar

MUMBAI – The net profit of Axis Bank is seen rising nearly 12% on year to 64.65 bln rupees for the Apr-Jun quarter, as per the average of estimates by 12 brokerage firms. However, on a sequential basis, the net profit is seen falling 9.3%. Seasonal stress could cause a rise in slippages, which in turn could affect the asset quality of the bank.

"We expect slippages of 45 bln rupees (nearly 1.8% of loans) mostly led by the retail and agriculture segment. Slippages tend to be higher in 1Q (Apr-Jun) due to PSL (priority sector lending)," Kotak Institutional Equities said in its pre-earnings report. The bank reported fresh slippages of 34.71 bln rupees in the previous quarter.

In terms of asset quality, the gross non-performing asset ratio was 1.43% as on Mar 31, compared with 1.58% reported a quarter ago. The net non-performing asset ratio fell to 0.31% as of Mar 31, against 0.36% reported a quarter ago. Emkay Global has pegged the gross NPA for the June quarter at 1.5%.

As per the average of estimates by 12 brokerages, the net interest income of the bank is seen rising 11.4% on year to 133.21 bln rupees for the June quarter. However, on a sequential basis, it is expected to rise merely 2%. Most analysts expect net interest margin to decline sequentially by 6-8 basis points from 4.06% in Jan-Mar due to rise in cost of funds. Cost of funds increased to 5.43% in Jan-Mar from 5.35% a quarter ago.

IDBI Capital expects advances and deposits to grow at 14.1% and 14% on year, respectively. The bank's balance sheet grew 12% on year to 14.7 trln rupees as of Mar 31. Net advances were at 9.65 trln rupees as of Mar 31, up 14% on year.

The retail advances, which contribute 60% to the total advances, grew 20% on year to 5.83 trln rupees as of Mar 31. The corporate advances rose 3% on year to 2.77 trln rupees and loans to small and medium enterprises rose 17% on year to 1.04 trln rupees. Total deposits were up 13% on year at 10.7 trln rupees.

YES Securities expects the growth in operating expenditure to be higher than loan growth due to the appraisal season. The bank is scheduled to announce its results for Apr-Jun on Wednesday. Analysts will focus on the bank's commentary regarding deposit mobilisation, future progression of margins, and raising of capital through equity.

On the National Stock Exchange, shares of the bank closed 0.4% higher at 1,309.40 rupees today.

Following are the standalone Apr-Jun earnings estimates of Axis Bank based on reports compiled by Informist from 12 brokerage houses:

End

Edited by Ashish Shirke

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