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Axis Bank Q2 Results Preview: Net Profit Likely To Jump Up To 50% YoY, NII May Rise By 25%

Private sector lender Axis Bankwhich will announce its September 2022 quarter (Q2FY23) results on Thursday, is expected to report a 40 per cent year-on-year jump in its net profit. It might see a rise of 8 per cent in its net profit on a quarterly basis. Its net interest income (NII) is likely to rise about 25 per cent YoY, according to brokerages.

Axis Bank had posted a net profit of Rs 3,133.3 crore, an operating profit of Rs 5,928.2 crore, an NII of Rs 7,900.3 crore, and net interest margin (NIM) of around 3.3 per cent in the year-ago quarter (Q2FY22).

ICICI Securities expects advances (loan book) to grow 3-4 per cent on a yearly basis and 17-18 per cent YoY to Rs 7.33 lakh crore, aided by a sustained focus towards secured retail segments, better-rated mid-corporate and tech-driven transformation initiative ‘Sankalp’ for MSMEs. This, it said, could be largely in line or a tad below peers.

It said, “Credit-to-deposit (C/D) ratio is expected to inch up as deposit growth is likely to lag advances growth, thereby supporting margins at 3.6 per cent. Operating expense growth to continue at 4 per cent QoQ, resulting in 17 per cent YoY growth. Absence of treasury hit to support 19-20 per cent operating profit growth.”

The brokerage said deposits might stand at Rs 8.27 lakh crore in September 2022 quarter, a jump of 12 per cent YoY and 3 per cent QoQ. NII is likely to be at Rs 9,848.1 crore, up 25 per cent YoY and 5 per cent QoQ.

Another brokerage Prabhudas Lilladher expects NII to grow 26.7 per cent YoY and 6.7 per cent QoQ to Rs 10,012.4 crore, as rate hikes would have been passed on to customers. NIM, therefore, is seen at 4.14 per cent.

It added that the bank is expected to report a 53.4 per cent growth in its net profit to Rs 4,778 crore on the back of lower provisions at Rs 615 crore as against Rs 1,735.1 crore in Q2FY22 and higher ‘other income’.

Kotak Institutional Equities in its report posted loan growth of 17 per cent YoY with a greater focus on retail, and SME (small and medium enterprises). It said NIM might improve QoQ, led by higher lending yields. Operating profit might grow at 22 per cent YoY to Rs 7,235.2 crore, mainly due to lower treasury income (Rs 120 crore vs Rs 473 crore YoY), and normalisation of operating expenses.

Axis Bank’s net profit during the September 2022 quarter might see a jump of 46.4 per cent YoY and 11.2 per cent QoQ to Rs 4,587 crore, Kotak Institutional Equities said.

“We expect slippages of Rs 3,500 crore (about 2 per cent of loans) mostly led by small-ticket loans. We expect strong commentary on asset-quality performance, and we see an improvement in NPL ratios, aided by stronger recovery/upgrades. Provisions are mainly to reduce net NPL ratios,” it said.

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