Axis Bank second quarter results outlook: Analysts see modest profit growth, weak NIM
Axis Bank Q2 results 2024 preview, date: Axis Bank will announce its July-September (Q2) quarterly results for the financial year 2024-25 (FY25) on Thursday, October 17. Brokers on average expect Axis Bank to report net profit growth in the low double digits, on a year-over-year basis (year-on-year), thanks to weak loan and other income growth.
In the corresponding quarter of the previous year (Q2 FY24), Axis Bank had reported a net profit of Rs 5,863.6 crore. The same was Rs 6,034.6 crore in the previous quarter of the current fiscal (Q1 FY25).
Operationally, Axis Bank recorded net interest income (NII) of Rs 12,314.6 crore in the second quarter of FY24, and Rs 13,448.2 crore in the first quarter of FY25. Profit before provision stood at Rs 8,631.9 crore and Rs 10,106.2 crore respectively.
Here’s what to expect from the Axis Bank Q2 results 2024 on October 17:
Nomura
The Japan-based brokerage has shared estimates on the conservative side. It expects Axis Bank’s net profit to be around Rs 6,330 crore in the second quarter, up 8 percent year-on-year and 5 percent quarter-on-quarter.
According to Nomura, this could be due to higher provisions compared to the previous year. It projects provisions for the second quarter of FY25 to stand at Rs 1,890 crore, up 132 percent year-on-year from the Rs 810 crore set aside last year. Sequentially, this would be a decline of 7 per cent, compared to around Rs 2,040 crore in the first quarter of FY25.
On the corporate side, Nomura expects Axis Bank’s loans to reach around Rs 9.95 trillion in the second quarter of FY25, registering a growth of 11 percent year-on-year and barely 2 percent quarter-on-quarter.
Similarly, deposits are seen at Rs 10.89 trillion, up 14 percent year-on-year and 2 percent quarter-on-quarter.
Motilal Oswal financial services
Domestic brokerage Motilal Oswal Financial estimates Axis Bank’s second-quarter profit after tax at Rs 6,630 crore, up 13 percent year-on-year.
Operationally, MOFSL expects NII to rise by about 11 percent year-on-year to Rs 13,630 crore. Including ‘Other Income’ of Rs 6,070 crore, Axis Bank’s ‘Total Income’ could reach Rs 19,700 crore by the end of the second quarter of FY25, MOFSL said.
“We expect Axis Bank’s credit deposit (CD) ratio, along with expense ratios, to remain high in the second quarter of FY25. We also expect margins to moderate in the second quarter,” the report said.
Motilal Oswal estimates Axis Bank’s loan book at Rs 10.1 trillion, growing 12.1 percent year-on-year. Meanwhile, deposits stand at Rs 11. trillion, up 15.8 percent year-on-year.
The brokerage, which expects Axis Bank’s gross non-performing assets (GNPA) ratio to rise to 1.6 percent from 1.5 percent quarter-on-quarter, said the lender’s asset quality will be one of the key monitorables are.
It expects NNPA to see a marginal increase from 0.3 percent quarter-on-quarter to 0.4 percent.
Prabhudas Lilladher institutional shares
Expecting moderate quarter-on-quarter growth, the brokerage said Axis Bank may report a NII of Rs 13,608.5 crore in the second quarter of FY25, up 10.5 percent year-on-year and 1.2 percent quarter-on-quarter.
It projects a flat pre-provision profit of Rs 10,106.3 crore on a sequential basis. However, this would be an annual growth of 17.1 percent.
A nearly 88 percent year-on-year increase in provisions to Rs 1,529.5 crore for the quarter could limit net profit growth to 9.7 percent year-on-year, 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 on an annual basis and 9 basis points on a quarterly basis to 4 percent.
“Loan growth may rebound on a quarter-on-quarter basis; NIM is expected to decline by 9 basis points on a quarter-on-quarter basis to 4.00 percent due to higher borrowing costs (CoFs). PPoP is also likely to remain flat on a quarter-on-quarter basis due to the increase in opex compensation due to increase in other Income,” the broker said.
Kotak institutional shares
Kotak Institutional Equities expects credit growth of approximately 11 percent on an annual basis (2 percent on a quarterly basis). This brings NIM’s projection to 3.8 percent (down 19 bps y/y/6 bps q/q), as it believes repricing of funds is chasing the lender.
Fee income growth should be slow, according to the report, due to weak loan growth.
Further, Kotak Institutional Equities said Axis Bank’s slippages could amount to Rs 5,000 crore (about 2 per cent of loans), led mainly by the retail sector. The main factors that can be controlled are slippages, especially in the unsecured segment, deposit mobilization and NIM progress
Overall, Axis Bank Q2’s NII is pegged at Rs 13,383.7 crore, while Axis Bank Q2’s pre-provision profit is pegged at Rs 9,761.7 crore; Axis Bank Q2 PAT at Rs 6,114 crore.
Nuvama institutional shares
Axis Bank’s NII in Q2 2024 is expected to grow 1.8 percent quarter-on-quarter and 11.2 percent year-on-year, according to Nuvama Institutional Equities. Including other income, total income could be Rs 19,688.9 crore (up 13 percent year-on-year and 2 percent quarter-on-quarter). The margin can decrease by 3 basis points.
YES Effects
YES Securities said Axis Bank’s sequential credit growth will be in the range of 3.5 percent due to its idiosyncratic growth trajectory. The growth of NIIs, the report added, could be marginally slower than average loan growth, due to the rise in the cost of deposits exceeding the yield on advances.
It pegs NII at Rs 13,751.2 crore, up 11.7 percent year-on-year and 2.3 percent quarter-on-quarter.
Consequently, NIM can fall consecutively. In addition, operational growth may lag behind business growth, while slippages may be lower on a sequential basis due to seasonality.
Provisions will also be reduced in a phased manner, said YES Securities for Axis Bank.
Axis Bank’s net profit in the second quarter stands at Rs 6,710.4 crore, up 14.4 percent year-on-year and 11.2 percent quarter-on-quarter.