Axis Bank Q3FY22 Preview: Axis Bank is slated to report its December quarter result (Q3FY22) later today. Ahead of the earnings, the shares of the private lender fell a per cent at Rs 703 apiece in the intra-day trade on the BSE.
Here’re expectations from the bank’s result:
Asset quality has been in-line or better-than-expected in recent quarters, which we expect to continue. With this backdrop, we expect lower slippages of Rs 3,250 crore (2.2 per cent of trailing loans, annualized) compared with Rs 5,460 crore (3.9 per cent) last quarter and normalized credit cost of 120 bps.
Moreover, we expect core pre-provision operating profit growth at 11 per cent year-on-year (YoY) at Rs 5,820.2 crore, as against a decline of 8 per cent YoY last quarter.
We expect margins to slightly improve to 3.43 per cent from 3.39 per cent last quarter, led by receding loan yield pressures, as growth in high-margin loans reaccelerates. Loan growth is expected to pick up sequentially at 4 per cent quarter-on-quarter (QoQ) led by retail and SME segments. On YoY basis, we expect growth at 11 per cent.
We expect strong fee income growth at 18 per cent YoY and 6 per cent QoQ.
We forecast loan growth at 11.3 per cent year-on-year and 4.3 per cent sequentially at Rs 6.48 trillion, up from approximately Rs 5.83 trillion in Q3FY21 and Rs 6.22 trillion in Q2FY22.
Operationally, we forecast net interest income (NII) growth at 13 per cent YoY and 5.5 per cent QoQ at Rs 8,331.2 crore. Core PPOP growth, meanwhile, is forecasted at 6.1 per cent YoY and 9.1 per cent QoQ at Rs 6,465.1 crore.
Net profit is pegged at Rs 3,230.4 crore, up 189.3 per cent YoY from Rs 1,116.6 crore, and 3.1 per cent QoQ from Rs 3,133.3 crore.
We forecast slippage ratio at Rs 6,518 crore or 3 per cent.
Motilal Oswal Financial Services
The brokerage pegs NII at Rs 8,110 crore, up about 10 per cent from Rs 7,372.8 crore posted in Q3FY21. Sequentially, NII was Rs 7,900.3 crore in Q2FY22. Including other income of Rs 4,050 crore, total income is seen at Rs 12,160 crore.
Further, it estimates operating profit at Rs 6,560 crore; profit before tax at Rs 3,940 crore; and net profit at Rs 2,950 crore.
According to the brokerage, the lender’s provisions for the quarter could be around Rs 2,620 crore while gross and net NPA ratio may come in at 3.7 per cent and 1.1 per cent, respectively. Provision Coverage Ratio (PCR) is seen at 71 per cent.
These were 3.5 per cent, 1.1 per cent, and 70.2 per cent, respectively, in Q2FY22.
We expect PAT to zoom 193.2 per cent YoY at Rs 3,274 crore while PBT could surge 195 per cent at Rs 4,395 crore. Advances are likely to grow by 12 per cent YoY led by retail portfolio and margins are expected to remain stable on a yearly basis.
We expect Q3FY22 slippages to moderate from 3.5 per cent run-rate in Q2FY21. Lower set of restructuring at 0.64 per cent provides comfort. Thus, we expect credit cost run-rate to be similar to H1FY22 average.
Sustained focus towards secured retail segments, better rated corporate and tech driven transformation initiative ‘Sankalp’ for MSME should aid the bank deliver overall loan growth of 13 per cent YoY at around Rs 6.53 trillion. With deposits at Rs 7.58 trillion, overall NII is seen at Rs 8,159.7 crore.
Operating profit, according to the brokerage, could grow 3 per cent YoY and 5 per cent QoQ at Rs 6,250.2 crore, and net profit is seen at Rs 2,922.3 crore.
Provisions could decline 49 per cent YoY but rise 35 per cent QoQ at Rs 2,339.5 crore. They were Rs 4,604.3 crore in Q3FY21 and Rs 1,735.1 crore in Q2FY22.