Axis Bank Q3 preview: Muted profit, single-digit growth in NII likely; NIM may fall

Axis Bank Ltd is expected to report a muted set of December quarter profit on a single digit rise in net interest income (NII). Provisions are seen rising while net interest margin (NIM) is seen contracting for the quarter.

Prabhudas Lilladher expects the bank to see a 4.1 per cent YoY fall in net profit at Rs 5,611 crore on 7.4 per cent YoY rise in NII at 12,311 crore. It sees provisions at Rs 1,100 crore, up 35 per cent sequentially. Gross NPA percentage is seen at 1.71 per cent, down 6 basis points over September's 1.78 per cent. PL sees NIM coming in at 4.05 per cent, down 17 basis points YoY and 14 basis points QoQ. Credit cost is seen at 0.47 per cent, up 11 basis points sequentially. 

Motilal Oswal said it sees profit at Rs 6,082.20 crore, up 3.9 per cent YoY. NII is seen growing 10.9 per cent YoY to R 12,710 crore. This brokerage sees provision at Rs 950 crore. It expects credit cost to inch up slightly. Cost ratios are expected to be elevated, it said while expecting margin to remain under pressure. Motilal Oswal expect the business growth to remain healthy.

Ahead of its results, Axis Bank shares were trading 2.84 per cent lower at Rs 1,088.95. The stock is flat year-to-date.

KRChoksey Shares and Securities said advances for the lender may jump 22.5 per cent YoY, led by the retail segment. Sequentially, it anticipated a growth of approximately 4.1 per cent in advances. Deposits are expected to grow 18 per cent year-on-year and 4.8 per cent sequentially.

"We expect the CASA ratio to be approximately 40.6 per cent as of December 31, 2023, compared to 41.3 per cent in the previous quarter. We expect NIMs to decline by approximately 13 bps QoQ in Q3FY24E. The cost-to-income ratio is likely to be 49.6 per cent for Q3FY24E as against 50.2 per cent in Q2FY24. We expect PAT to grow 3.9 per cent YoY/3.7 per cent QoQ despite higher operating expenses led by lower credit costs, especially on a YoY basis," it said.

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