NEW DELHI: is likely to report over 40 per cent year-on-year (YoY) rise in profit for the March quarter on a 20 per cent plus growth in net interest income (NII). Net interest margin (NIM) is seen improving marginally, aided by recoveries.
All eyes would be on the management commentary on asset quality and BB and below book, said analysts.
Sharekhan expects the bank to report a 44.3 per cent YoY rise in profit at Rs 3,864 crore compared with Rs 2,677 crore in the same quarter last year. NII is seen rising 22.7 per cent YoY to Rs 9,269 crore compared with Rs 7,555 crore in the corresponding quarter last year.
Pre-provision operating profit is seen rising a mere 2.7 per cent YoY to Rs 7,052 crore.
“Advances may grow 14 per cent YoY and 7 per cent QoQ with a focus on the retail and SME segments. NIM may witness marginal improvement at 3.9 per cent, aided by higher-yielding loan segments.
Kotak Institutional Equities said profit for the quarter may rise 51.1 per cent YoY to Rs 4,045 crore, while it sees NII rising 22.4 per cent to Rs 9,246 crore.
“We expect loan growth at 15 per cent YoY, similar to other frontline banks, with a greater focus on retail and SME. NIM to be stable or marginal improvement led by a shift towards higher-yielding loans. We see operating profit growth at 3 per cent YoY, primarily due to lower treasury income and normalisation of operating expenses,” Kotak said.
ICICI Securities, which sees profit rising 48 per cent YoY to Rs 3,957 crore, said industry credit demand gives confidence that Axis Bank, too, would participate in the opportunity and register a 7 per cent QoQ uptick.
“Even on a high base of Q4FY21, this would translate to 16 per cent YoY growth. Sustained focus on secured retail segments, better-rated corporate and tech-driven transformation initiative ‘Sankalp’ for MSME should aid overall growth. With stable NIMs, even if NII grows 5-6 per cent QoQ, this would effectively mean over 20 per cent NII growth. Operating expense growth is likely to be elevated at 20 per cent,” the brokerage said.
The brokerage expects slippages to moderate at 2.3 per cent for H2FY22 from 3.8 per cent in H1FY22. It sees credit cost run-rate to be stable QoQ.
In value terms, Kotak sees slippages at Rs 3,500 crore , about 2.2 per cent of loans. It would be mostly led by retail.
“We expect strong commentary on asset quality performance and see an improvement in NPL ratios aided by stronger recovery/upgradations. Provisions are mainly to reduce net NPL ratios,” it said.
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