Axis Bank Q2 preview: Profit seen in excess of Rs 1,700 crore; fall in QoQ provisions likely

NEW DELHI: Axis Bank is expected to report a profit in excess of Rs 1,700 crore in the September quarter. This would be against a loss of Rs 112 crore the private lender reported in the September quarter of last year. The numbers last year were hit by one-time taxes.

The private lender is seen reporting 15-17 per cent growth year-on-year (YoY) in net interest income (NII) and around 3.4 per cent in net interest margin (NIM). Any management commentary on BB and below rated loan pool, deposit traction and additional provisions would be keenly tracked, analysts said.

HDFC Institutional Equities said provisions for Axis Bank would fall sharply during the quarter, which would result in a 59 per cent jump in sequential profit. NII is seen growing 15.9 per cent YoY to Rs 7,070 crore. Profit is seen at Rs 1,770 crore.

"A nearly 10 per cent loan growth and a marginal improvement in NIMs are expected to drive core earnings growth of 16 per cent YoY. A drop in non-interest income due to muted core fees and lower treasury gains will result in pre-provisioning operating profit to fall 5 per cent YoY. We have factored in a 13 per cent YoY rise in non-tax provisions, even as Axis Bank has a calculated PCR of 75 per cent," the brokerage said. PCR stands for provision coverage ratio.

IIFL sees profit at Rs 1,740 crore. It sees NII growth of 17 per cent YoY at Rs 7,160 crore. NIM is seen at a similar level at 3.4 per cent in the June quarter.

"Margins are likely to be flatish compared with 3.4 per cent NIM reported in the June quarter and would have the benefit of capital raised in the quarter. Asset quality should remain stable or improve sequentially due to lower slippages," it said.

Edelweiss sees Axis profit at Rs 1,702 crore.

"Loan momentum will be tepid as demand remains weak and lenders are risk averse. Retail deposits growth will likely be steady, but traction on corporate deposits needs to be monitored. On the asset quality front, September will be the first month post the moratorium and thus collections for this period remain vital. Also, loans under restructuring guidance will be a key pointer. The bank will continue to shore up provisioning owing to stress on asset quality from Covid-19 outbreak," it said.