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Axis Bank is seen reporting a 7-12 per cent y-o-y rise in net profit for Q2 FY24, according to estimates by brokerages, which peg the figure at Rs 5,330-5,970 crore. On quarter, profit after tax is seen falling 2 per cent, owing to elevated cost ratios from the merger.
The bank had posted a net profit of Rs 5,797 crore in Q1 FY24, up 40.5 per cent on year. It is expected to declare its Q2 results post market hours on Wednesday, ahead of which its shares were trading 0.3-0.4 per cent higher.
Also read: Axis Bank Q2 PAT jumps 70 per cent on strong NII growth, margin expansion
Loan growth is seen at 20-22 per cent y-o-y and 3-4 per cent q-o-q. Deposits, too, are seen growing 20-22 per cent on year, according to brokerage estimates.
“We expect the loan mix to be a bit more favourable towards higher-yielding loans, as seen in recent quarters. We expect slippages of Rs 4,200 crore (2 per cent of loans), mostly led by the retail segment,“ Kotak Institutional Equities said.
Contained slippages and consequently steady provisions are seen supporting profitability for the lender. However, sequentially, additional provision of 10-15 bps could be created to absorb costs from the acquisition of Citibank’s consumer banking business effective March 2023.
Net interest income (NII) is seen around 15 per cent higher, with NII estimates ranging between Rs 10,360-11,959 crore. Net interest margin (NIM) for the quarter is expected to decline 10-15 bps sequentially, and 8-10 bps on year, in-line with the industry, owing to a rise in cost of deposits, higher wage expenses and elevated credit costs.
Also read: Axis Bank-Citibank merger complete
“Key risks for the company are macro risks from the inflation-interest rate-growth dynamic. A protracted high interest-rate cycle is a greater risk to Axis Bank than to large private peers, in terms of potential market share loss in prime credit,” research firm BNP Paribas said.
The gross NPA ratio is seen at 1.9-2.0 per cent, whereas the net NPA ratio is seen around 0.3 per cent, as at the end of September.
Citi integration, near-term growth trends, and margin trajectory will be key monitorables for the quarter, analysts said.
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