Leading private lender Axis Bank will report its third quarter results today and analysts expect a modest growth in both net interest income and profit. The year-on-year figures are still not comparable because of Citi’s acquisition.
Net interest income (NII) for the October-December period is expected to rise by a marginal 1% quarter-on-quarter, according to an average estimate of four brokerages.
Meanwhile, profit growth is expected to be in the range of 2-5% quarter-on-quarter.
Investors may need to keep any eye on net interest margins, which are expected to decline due to higher cost of deposits. Also on the radar are credit costs, expected to inch up slightly, business growth, loan mix and asset quality.
Here’s what brokerages expect from Axis Bank’s Q3
Motilal Oswal
Credit costs to inch up slightly. Cost ratios are expected to be elevated. Margins to remain under pressure. Expect business growth to remain healthy.
Kotak Equities
We are building loan growth of 4% quarter-on-quarter. We are building NIM to decline 10 bps quarter-on-quarter. We expect the loan mix to be a bit more favorable toward higher-yielding loans, as seen in recent quarters.
Nuvama
With a high starting CD ratio of 94%, we expect Axis to grow deposits faster than loans. We expect deposit growth of 5% quarter-on-quarter with higher share of bulk deposits and loan growth of 3.5%. Even with that, the CD ratio shall stay very elevated at 92% versus 94% quarter-on-quarter.
We anticipate NIM to decline 13 bps quarter-on-quarter. We expect opex to grow 3.5% quarter-on-quarter on a high base of Q2FY24. We expect cost/assets to stay flat at 2.6%, similar to Q2FY24. We expect core PPOP to decline 1% YoY and be flat quarter-on-quarter.
Dolat
Loan book to grow at 4% quarter-on-quarter. NIM to moderate by 20-25bps quarter-on-quarter, led by higher deposit growth (CD ratio at 94%). Lower NIM should be offset by normalization in opex, aiding RoAs of 1.7%. Slippages to remain benign at sub 2%.
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