Axis Bank Q2 results preview: Analysts see modest profit growth, weak NIM

Operationally, Axis Bank saw a net interest income (NII) of Rs 12,314.6 crore in Q2 FY24, and Rs 13,448.2 crore in Q1 FY25. Its pre-provision profit was Rs 8,631.9 crore and Rs 10,106.2 crore, respectively.

 

Here’s what to expect from Axis Bank Q2 results 2024 on October 17:

Nomura

The Japan-based brokerage has shared estimates on the conservative side. It expects Axis Bank Q2 net profit to come around Rs 6,330 crore, up 8 per cent Y-o-Y and 5 per cent Q-o-Q.

 

This, Nomura said, could be due to higher provisions over the previous year. It sees Q2 FY25 provisions at Rs 1,890 crore, up 132 per cent Y-o-Y over Rs 810 crore set aside last year. Sequentially, it would be a 7 per cent decline from approximately Rs 2,040 crore seen in Q1 FY25.

 

On the business side, Nomura expects Axis Bank’s Q2 FY25 loans to come around Rs 9.95 trillion, clocking a growth of 11 per cent Y-o-Y and barely 2 per cent Q-o-Q.

 

Similarly, Deposits are seen at Rs 10.89 trillion, up 14 per cent Y-o-Y and 2 per cent Q-o-Q.

 

Motilal Oswal Financial Services

Domestic brokerage Motilal Oswal Financial estimates Axis Bank’s Q2 profit after tax at Rs 6,630 crore, up 13 per cent Y-o-Y.

 

Operationally, MOFSL expects NII to rise around 11 per cent Y-o-Y to Rs 13,630 crore. Including the ‘Other income’ of Rs 6,070 crore, ‘Total income’ of Axis Bank at the end of Q2 FY25 could stand at Rs 19,700 crore, MOFSL said.

 

“We expect Axis Bank’s credit-deposit (CD) ratio, along with cost ratios, to remain elevated in Q2 FY25. We also expect margin to moderate in Q2,” it said.

 

Motilal Oswal pegs Axis Bank’s Loan book at Rs 10.1 trillion, a growth of 12.1 per cent Y-o-Y. Meanwhile, Deposits are seen at Rs 11. trillion, up 15.8 per cent Y-o-Y.

 

The brokerage, which anticipates Axis Bank’s gross non-performing asset (GNPA) ratio to rise to 1.6 per cent from 1.5 per cent Q-o-Q, said that the lender’s asset quality will be among key monitorables.

 

It expects NNPA to see a marginal uptick to 0.4 per cent from 0.3 per cent Q-o-Q.

 

Prabhudas Lilladher Institutional Equities

Projecting a muted growth on a quarterly basis, the brokerage said Axis Bank may report NII at Rs 13,608.5 crore in Q2 FY25, up 10.5 per cent Y-o-Y and 1.2 per cent Q-o-Q.

 

It sees flat pre-provision profit at Rs 10,106.3 crore on a sequential basis. This would, however, be a 17.1 per cent yearly growth.

 

A near 88-per cent Y-o-Y surge in provisions, at Rs 1,529.5 crore for the quarter, may cap net profit rise to 9.7 per cent Y-o-Y, PL said. It sees PAT at Rs 6,432.6 crore for Q2 FY25.

 

It expects net interest margin (NIM) to contract by 19 basis points Y-o-Y and 9bps Q-o-Q to 4 per cent.

 

“Loan growth may bounce back Q-o-Q; NIM is expected to decrease by 9bps Q-o-Q to 4.00 per cent due to increased cost of funds (CoFs). PPoP, too, is likely to remain flat Q-o-Q due to increase in opex setoff by increase in other Income,” the brokerage said.

 

Kotak Institutional Equities

Kotak Institutional Equities is factoring-in a loan growth of around 11 per cent Y-o-Y (2 per cent Q-o-Q). This brings NIM projection to 3.8 per cent (down 19 bps Y-o-Y/6 bps Q-o-Q) as it sees re-pricing of funds to be behind the lender.

Fee income growth, it said, should be sluggish, reflecting weak loan growth.

 

Further, Kotak Institutional Equities said Axis Bank’s slippages may come at Rs 5000 crore (around 2 per cent of loans), mostly led by retail. Key monitorables would be slippages, especially from the unsecured segment, deposit mobilisation, and NIM progression

 

Overall, it pegs Axis Bank Q2 NII at Rs 13,383.7 crore, Axis Bank Q2 pre-provision profit at Rs 9,761.7 crore; Axis Bank Q2 PAT at Rs 6,114 crore.

 

Nuvama Institutional Equities

Axis Bank’s Q2 2024 NII, Nuvama Institutional Equities said, is expected to grow 1.8 per cent Q-o-Q and 11.2 per cent Y-o-Y. Including Other Income, Total Income may stand at Rs 19,688.9 crore (up 13 per cent Y-o-Y and 2 per cent Q-o-Q). Margin may decline by 3bps.

 

YES Securities

YES Securities said Axis Bank’s sequential loan growth will be in the 3.5-per cent ballpark due to idiosyncratic growth trajectory. NII growth, it added, may be marginally slower than average loan growth due to rise in cost of deposits outpacing yield on advances.

 

It pegs NII at Rs 13,751.2 crore, up 11.7 per cent Y-o-Y and 2.3 per cent Q-o-Q.

 

Consequently, NIM may fall sequentially. Further, opex growth may lag business growth, while slippages could be lower on sequential basis due to seasonality.

 

Provisions, too, will lower on a sequential basis, YES Securities said for Axis Bank.

 

It sees Axis Bank Q2 net profit at Rs 6,710.4 crore, up 14.4 per cent Y-o-Y and 11.2 per cent Q-o-Q.