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Informist, Tuesday, Oct. 14, 2025

 

By Vaishali Tyagi

 

MUMBAI – Axis Bank's net profit for the September quarter is expected to fall due to a near-20 basis point contraction in its net interest margin and higher credit cost, brokerages tracking the private sector bank said. Most brokerage firms expect moderation in the net interest margin due to the impact of interest rate cuts effected by the Reserve Bank of India's Monetary Policy Committee and due to faster loan re-pricing compared to its peers. The MPC has lowered the repo rate by 100 bps between February and June to 5.50%.

 

Brokerages expect the bank's net interest margin to fall by 10 to 25 basis points sequentially in the reporting quarter. The bank's net interest margin in the June quarter was 3.80%, down from 3.97% in the March quarter.

 

The bank is seen posting a net profit of INR 59.30 billion for the September quarter, down over 14% on year, according to the average of the estimates of 11 brokerage firms. The private sector lender's bottom line is expected to rise just 2% sequentially. Estimates for the bank's net profit ranged from INR 52.51 billion to INR 65.51 billion. The highest estimate for net profit, INR 65.51 billion, was by Anand Rathi Share and Stock Brokers Ltd. while the lowest estimate, INR 52.51 billion, was by Kotak Institutional Equities Ltd.

 

ICICI Securities expects the net interest margin to fall by 20 to 25 bps, while Kotak Institutional Equities sees a 10-20 bps fall in the net interest margin for the September quarter. "NIMs to decline by nearly 25 basis points on quarter due to timing difference in repricing of loans," Nomura Equity Research said.

 

Brokerages expect the bank's credit cost to remain elevated. The bank's credit cost increased to 1.70% in the June quarter from 0.84% in the previous quarter and 1.19% a year ago. "Credit cost to moderate but remain elevated at 1.1%," Nomura said. 

 

Brokerages had mixed views on the bank's loan growth. Nomura expects Axis Bank's loan growth to pick up in September quarter. However, analysts at YES Securities (India) Ltd. expect sequential loan growth to be weak, at less than 2.5%. The bank's personal loans increased 5% year-on-year to INR 770.99 billion but rural loans had fallen 5% on quarter to INR 931.40 billion in the June quarter.

 

Most brokerage firms expect a marginal fall in the net interest income sequentially for the quarter ended September due to contraction in the net interest margin. The bank's net interest income is seen declining slightly over 1% on year to INR 133.09 billion, as per the average of the estimates of 11 brokerages. Sequentially, the net interest income is seen falling nearly 2% on quarter. 

 

Kotak expects the net interest income to come in at INR 130.36 billion and sees loan growth at 9% on year, while sequentially it expects the loan growth to be 3%. In the June quarter, the bank's net interest income had risen 1% on year to INR 135.60 billion. 

 

Brokerages remained divided on the bank's slippage ratio. Analyst at ICICI Securities see a sharp improvement in the bank's slippage ratio to 2.0%, while Kotak estimates slippages of around 2.2% of loans. Brokerages expect the bank's asset quality to deteriorate in September quarter.

 

Axis Bank's gross non-performing assets ratio rose 3 basis points on year and 29 bps on quarter to 1.57% as on Jun. 30. The net non-performing assets ratio rose 11 bps on year and 12 bps on quarter to 0.45%.

 

For the September quarter, Kotak expects slippages of INR 60 billion, which amounts to 2.2% of loans to be led by retail and the limited liability partnership segment. The net slippage ratio of the bank was 2.33% as of Jun. 30 and the gross slippage ratio was 3.13%. 

 

Commentary on asset quality, margins, and the outlook for loan and deposit growth will be the key factors to monitor, analysts said. Other key parameters include slippages, especially from the unsecured segment, and NIM progression.

 

Out of the 24 brokerages reports on the bank available with Informist, 20 have a 'buy' rating on the stock while four have a 'hold' rating. Axis Bank will announce its financial results for the September quarter on Wednesday. At 1358 IST, shares of the bank traded 1.5% lower at INR 1,171.10 on the National Stock Exchange.

 

Following are the Jul-Sept earnings estimates for Axis Bank from 11 brokerages in descending order of the estimate of net profit in INR million:

 

Brokerage	Net interest income (in INR million)	Net profit (in INR million)
Anand Rathi Share and Stock Brokers Ltd.	139,117	65,509
Nomura Equity Research	131,100	65,400
Prabhudas Lilladher Pvt Ltd	136,347	64,345
YES Securities (India) Ltd.	138,793	62,572
Emkay Global Financial Services Ltd.	130,974	61,072
Nirmal Bang Equities Pvt Ltd	131,472	59,894
Nuvama Wealth Management Ltd.	137,000	59,860
Motilal Oswal Financial Services Ltd.	131,679	55,331
ICICI Securities Ltd	129,283	53,194
JM Financial Institutional Securities Pvt. Ltd.	126,276	52,623
Kotak Institutional Equities	130,356	52,513
Average	132,945.18	59,301.18

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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