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Informist, Tuesday, Oct. 15, 2024

MUMBAI – Axis Bank Ltd. is expected to show some improvement in its earnings for Jul-Sept on the back of a rise in income and lower provisions, with the average of estimates of 14 brokerages suggesting the private sector lender will post an 11% increase in net profit to INR 65.07 billion. Axis Bank's net profit is seen in the range of INR 61.14 billion-INR 69.47 billion. In Apr-Jun, the bank's net profit stood at INR 60.35 billion. Sequentially, the net profit in Jul-Sept is seen 7.8% higher. Axis Bank will announce its quarterly results Thursday.

The bank's net interest income, meanwhile, is seen rising nearly 14% to INR 140.26 billion, as per the average of estimates of 14 brokerages. Sequentially, the net interest income is seen 4.3% higher. According to YES Securities, growth in Axis Bank's net interest income "will be slightly slower than average loan growth due to rise in cost of deposits outpacing yield on advances". YES Securities expects Axis Bank to post a lower-than-average net interest income of INR 137.51 billion for the reporting quarter.

Most brokerages expect margins to either remain stable or fall sequentially. In Apr-Jun, the bank's net interest margin stood at 4.05%, marginally lower than 4.06% in the last quarter of 2023-24 (Apr-Mar).

On the business front, brokerages see Axis Bank's growth in advances moderating compared to the past quarter. As of Jun. 30, advances were up 14% at INR 9.80 trillion. According to IDBI Capital, loan growth is seen easing somewhat to 13%, while Kotak Institutional Equities and Sharekhan Ltd see it even lower at 11%. On the deposit front, analysts will eye bank management's commentary on mobilisation of funds and improvement in margins at a time when deposit growth for the banking sector has been weaker than loan growth.

Brokerages will also keenly watch out for asset quality numbers of Axis Bank. As of Jun. 30, the bank's gross non-performing asset ratio increased to 1.54% from 1.43% a quarter ago, while the net non-performing asset ratio rose to 0.34% from 0.31%. As per Emkay Global Financial Services, the gross non-performing asset ratio is expected to have risen further to 1.6% at the end of Jul-Sept due to stress in the bank's unsecured retail book. YES Securities expects slippages to be lower on a sequential basis due to seasonality.

In Apr-Jun, Axis Bank had reported fresh slippages of INR 47.93 billion, while recoveries and upgrades amounted to INR 15.03 billion. The lender also wrote-off loans to the tune of INR 22.06 billion in the same quarter.

On Tuesday, shares of Axis Bank closed 0.9% lower at INR 1,153.85 on the National Stock Exchange.

Following are the Jul-Sept earnings estimates of Axis Bank based on reports compiled by Informist from 14 brokerage houses:

End

Reported by Kshipra Petkar

Edited by Tanima Banerjee

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