Shares of Axis Bank declined 5.5 per cent to hit an intraday low of Rs 795.85 on the BSE after the lender posted its earnings for the quarter ended September 2021.
Axis Bank reported an all-time high quarterly profit of Rs 3,133 crore in Q2 FY22, recording an 86 per cent year-on-year (YoY) growth as compared to Rs 1,683 crore profit in Q2 FY21.
The high profit can be attributed to strong CASA (current account savings account) and fee performance, accelerating loan growth in focus segments, limited restructuring, improving asset quality, and resilient balance sheet, the private sector lender said.
The stock opened a tad lower at Rs 842.20 against the previous close of Rs 842.25 on the BSE on Wednesday. With a market capitalisation of more than Rs 2,44,000 crore, the shares stand higher than 20 day, 50 day, 100 day and 200 day moving averages but lower than 5 day moving averages.
The large-cap stock has gained 57 per cent in the last one year and has risen 29 per cent since the beginning of this year.
The bank's operating profit for the quarter was at Rs 5,928 crore, while the core operating profit stood at Rs 5,456 crore. Net interest income (NII) grew 8 per cent YoY to Rs 7,900 crore from Rs 7,326 crore in Q2 FY21. The net interest margin (NIM) for Q2 stood at 3.39 per cent.
According to ICICI Securities, Axis Bank's (Axis) Q2FY22 earnings surprised positively on portfolio quality 1) despite elevated slippage (3.5 per cent vs 4 per cent in FY21) recoveries, upgrades pulled GNPAs down 32 basis points QoQ to 3.53 per cent; 2) restructuring at mere 0.64 per cent, and 3) credit cost contained at 1.4 per cent (better than its estimate of 1.7 per cent) reinforces adequacy of an existing buffer.
"However, this was offset by 1) growth momentum (1 per cent QoQ/10 per cent YoY) lagging peers; 2) portfolio mix shift weighing further on NIMs (down 7 basis points QoQ to 3.39 per cent); 3) operating cost being elevated with 36 per cent YoY/17 per cent QoQ growth. Moderating credit cost trend is encouraging and now growth acceleration coupled with NIM improvement would be critical triggers to deliver superior RoEs," added the brokerage house.
Motilal Oswal noted that Axis Bank (AXSB) delivered a weak operating performance in 2QFY22 that was characterised by margin weakness (7 basis points QoQ decline) and a muted trend in Core PPoP. However, lower provisions (Rs 17.3 billion) aided earnings which surpassed its estimate by 13 per cent.
The brokerage firm added that the business growth was tepid and was pulled down by a 5 per cent QoQ decline in corporate advances, while a strong sequential recovery was witnessed in SME/Retail loans.
CLSA stated that the bank posted strong asset quality but weak pre-provision operating profit (PPoP). It has a 'Buy' rating on the stock with a target price of Rs 1,080 per share.
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