Axis Bank Q3 Preview: Lender likely to report up to 200% PAT jump, loan growth in double digits

NEW DELHI: Private lender Axis Bank is likely to report a strong set of numbers for the December quarter supported by impressive growth in deposits and advances.

Analysts expect a 150-200 per cent jump in net profit during the period, compared to the same quarter last year. Net interest income (NII) growth is likely to be in double digits. However, compared to the previous quarter, these numbers are likely to dip.

“Slippages should decline significantly on sequential basis due to underlying factors as well as due to the absence of one-offs (Srei). Considering all factors, including a slight winding down of excess liquidity, net interest margin should rise meaningfully on a sequential basis,” said analysts at YES Securities.

According to them, Axis Bank’s fee income should rise in reasonably healthy fashion due to improved business activity and payment transactions during the festival season.

“Expenses would rise sequentially as dictated primarily by increased business activity. Provisions would rise sequentially since high recoveries in 2QFY22 had led to significant writebacks,” they added.

In the September quarter, Axis Bank had reported an 86 per cent year-on-year (YoY) rise in net profit at Rs 3,133 crore. This was the highest ever quarterly profit for the bank. Net interest income (NII) for the bank had risen 8 per cent.

ICICIdirect estimates the lender to post advance growth of 10.4 per cent YoY to Rs 6.4 lakh crore while deposits are seen growing at 14 per cent YoY to Rs 7.4 lakh crore wherein CASA should remain steady at 44.5 per cent. It projects net interest income to grow 11.3 per cent YoY to Rs 8,207 crore while net interest margin is expected at 3.75 per cent—a marginal improvement.

“Improving pace of business activity is seen keeping opex steady while a sequential decline in credit cost may lead to earnings at Rs 3,176 crore. GNPA, NNPA ratio is seen staying steady at 3.5 per cent, 1.1 per cent, respectively,” said ICICIdirect.

Analysts at Sharekhan project advances to grow by 12 per cent YoY led by retail portfolio. But it sees margins being stable on a YoY basis. Key monitorable would be slippages and BB and below book, it said.