Axis Bank Q2 results: Profit may jump 7-14%, NIM seen at 4%; here're key expectations

Axis Bank is likely to report 7-14 per cent year-on-year (YoY) rise in net profit for the September quarter on a 9-12 per cent jump in net interest income (NII). Net interest margin (NIM) may fall to around 4 per cent on rise in cost of funds, analysts said. While slippages may fall sequentially, recoveries may stay weak.

Investors would keenly follow the management commentary on cost normalisation, outlook on pre-provision operating profit (PPoP) growth and credit cost outcomes.

YES Securities expects Axis Bank to report 14.4 per cent YoY rise in net profit at Rs 6,710 crore on 11.7 per cent YoY rise in NII at Rs 13,751 crore. Pre-provision operating profit is seen at Rs 10,367 crore, up 20.1 per cent.

Sequential loan growth will be in the 3.5 per cent ballpark due to idiosyncratic growth trajectory, it said. "NII growth will be slightly slower than average loan growth due to rise in cost of deposits outpacing yield on advances. Consequently, NIM will be slightly lower sequentially. Sequential fee income growth will broadly match loan growth. Opex growth would slightly lag business growth," it said.

Slippages are seen falling on sequential basis due to seasonality.

Emkay Global expects Axis Bank to log 6.9 per cent jump in profit at Rs 6,270 crore, even as it sees NII climbing 10.4 per cent YoY to Rs 13,593 crore. This brokerage sees NIM at 4 per cent against 4.1 per cent in June and the year-ago quarter.

"We expect that slower credit growth coupled with elevated provisions would keep earnings growth in check. Slippages could moderate QoQ, but recoveries remain soft from the 1Q pool," it said.

Elara Securities said Axis Bank profit may grow 8.7 per cent at Rs 6,375 crore on 9.4 per cent rise in NII at Rs 13,466 crore.

"We expect softer QoQ growth in loan book, in line with industry trends. NIM continues to be a key monitorable. We expect a 34 bps drop as funding cost rises. Opex trend would stabilise, which will support core PPoP growth.  We expect asset quality to be key monitorables, and credit cost is likely to move toward long-term average," the brokerage said.