Axis Bank Q2 preview: Earnings could rise over 40% YoY with low provisions
Axis Bank Q2 overview: Axis Bank, which is expected to release its September second-quarter results for fiscal 2022-23 (FY23) on Thursday, Oct. 20, is expected to post net profit growth of more than 40% year-on-year, the houses noted. brokerage. On a quarterly basis, it could see an improvement of at least 8%. That aside, net interest income (NII), they predict, could rise nearly 25% year-over-year.
In the quarter of the previous year (Q2FY22), Axis Bank reported net profit of Rs 3,133.3 crore, operating profit of Rs 5,928.2 crore and NII of Rs 7,900.3 crore . It’s net interest margin (NIM) was about 3.3 percent. Sequentially, PAT stood at Rs 4,125.3 crore in T1FY23, PPoP at Rs 5,887 crore and NII at Rs 9,384 crore.
Main controllable elements
Analysts said Citi’s portfolio progress, direction of operating profit growth, guidance/outlook on restructured loans and asset pool BB and below, and credit growth amid slowdown, will be watched by investors.
Here’s what key brokers are penciling in for Axis Bank’s Q2FY23 result:
The brokerage expects NII growth of 26.7% YoY and 6.7% QoQ to Rs 10,012.4 crore as rate hikes would have been passed on to customers. NIM, therefore, is seen at 4.14 percent.
In addition, net profit was 53.4% higher year-on-year to Rs4,778 crore due to lower provisions at Rs615 crore (vs. Rs1,735.1 crore in Q2FY22) and other income higher. Earnings before provision (or operating profit), meanwhile, is pegged at Rs 6,985.6 crore, up 18% year-on-year. On a quarterly basis, this would represent an increase of 16% in PAT and 19% in PPPoP.
It expects advances (loans book) to grow 3-4% QoQ and 17-18% YoY to Rs 7.33 trillion, helped by a continued focus on credit segments. Secure Retail, a top-rated medium-sized business transformation initiative focused on ‘Sankalp’ technology for MSMEs. That, he said, could be well in line or a little below peers.
Deposits, meanwhile, are pegged at 8.27 trillion rupees, up 12% year-on-year and 3% quarter-on-quarter. Given this, NII is projected at Rs 9,848.1 crore, up 25% YoY and 5% QoQ.
“The credit-to-deposit (C/D) ratio is expected to rise slightly as deposit growth is likely to lag advance growth, supporting spreads at 3.6%. will continue at 4% QoQ, this 100% YoY growth. The lack of cash helped support operating profit growth of 19-20%,” the brokerage said. In absolute terms, the PPPoP is pegged at Rs 7,076.7 crore and the net profit is estimated at Rs 4,462.2 crore.
Regarding asset quality, she expects slippages of around 2.3% and a normalization of the cost of credit rate at 60-65 basis points. Additionally, there could be higher recoveries and QoQ upgrades, which should lead to a decline in gross non-performing assets (GNPA) QoQ ratio to 2.7% (vs. 2.8% in Q1FY23&3 .5% YoY).
The brokerage has one of the most optimistic estimates with net profit up 68% year-on-year to Rs 5,270 crore. NII is expected to rise 33% YoY and 12% QoQ to Rs 10,499.7 crore, while PPoP is pegged at Rs 7,776.9 crore, up 31% YoY. year and 32% over a quarter.
It expects loan growth of 20% year-on-year and deposit growth of 13.5% year-on-year. Credit costs could rise to 0.4% vs. 0.2% QoQ. On an annual basis, it may fall by 1.12 percent.
Motilal Oswal Financial Services
At the lower end of the projection spectrum is this brokerage, with PAT pegged at Rs 4,240 crore, up 35% YoY. It expects PPPoP to rise by only 15% year on year to Rs 6,800 crore and NII by 23% to Rs 9,740 crore.
He expects the GNPA ratio to come in at 2.7%, the NNPA at 0.6% and the provision coverage ratio at 77%.
Kotak Institutional Stocks
The brokerage expects loan growth of 17% year-on-year, with a greater focus on retail and SMEs. NIM, he said, could improve QoQ, through higher loan yields. Operating profit is expected to increase by 22% YoY to Rs 7,235.2 crore, mainly due to lower cash income (Rs 120 crore vs. Rs 473 crore YoY) and normalization of operating expenses. exploitation. Net profit is seen up 46.4% YoY and 11.2% QoQ to Rs 4,587 crore.
“We expect slippages of Rs 3,500 crore (~2% of loans), mainly from small loans. We expect strong feedback on asset quality performance, and we see improving ratios NPL, aided by stronger recovery/upgrades. The provisions are primarily aimed at reducing net bad debt ratios,” he said.