Private lender is expected to report strong growth in net profit in the third quarter of the current financial year, mainly driven by healthy net interest income growth and loan book.
The company is expected to post up to 55% growth in net profit, with double-digit growth in the net interest income (NII). Axis Bank posted a net profit of Rs 5,329 crore and an NII of Rs 10,360 crore in the September quarter.
Key monitorables include the progress of the Citi portfolio, the direction of operating profit growth, commentary around deposit strategy and margin trajectory. Axis Bank will announce its results on January 23. Here’s what brokerages expect from Axis Bank’s Q3 results
Motilal Oswal sees net interest income (NII) to grow in healthy double digits at 29% year-on-year (YoY) to Rs 11,130 crore for the third quarter. The brokerage expects credit costs and slippages to remain stable while moderation in cost ratios is to be closely monitored. While margins are set to witness an expansion, the brokerage expects business growth to see healthy traction. On the asset quality front, gross non-performing assets (NPAs) are set to reduce marginally quarter-on-quarter to 2.4%, while net NPAs remain the same.
Kotak Institutional Equities
The brokerage sees a healthy loan growth at 15% YoY and 6% quarter-on-quarter (QoQ), with a greater focus on retail and SME loans. The net interest margin (NIM) is seen to be stable QoQ, with a marginal upward bias driven by stronger loan repricing compared to deposits.
Kotak has estimated about 30% growth in operating profit, led by normalization of operating expenses. While slippages are seen at Rs 3,500 crore (2% of loans), led by small-ticket loans, the brokerage expects strong commentary on the asset-quality performance and an improvement in NPL ratios, aided by stronger recovery/upgradation.
ICICI Securities estimates profit after tax would surge 53% to Rs 5,515 crore, while NII is seen growing at 27% year-on-year. Advances are expected to grow 5% quarter-on-quarter in line with peers, and the high base effect is likely to lead to 15% YoY advance growth, which is a tad below peers. Market share gain in SME, Bharat banking, leadership growth in cards, strengthening of transaction banking, and growth in identified focused retail segments, will be the key growth drivers, according to ICICI Securities.Nomura
Nomura sees net income growth of 49% YoY, helped by a weaker base. It expects deposit growth to lag loan growth, and hence, margins are expected to remain stable quarter-on-quarter. Loan growth will likely be driven by the SME and retail segment, while corporate loans may not see much growth. The brokerage estimates slippages to increase to 2.2% of 12-month prior loans. We don’t expect the bank to release buffer provisions.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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