Axis bank Q4 preview: Mumbai-based Axis Bank may report around 50 per cent year-on-year (YoY) growth in net profit, when it announces its January-March quarter (Q4Fy44) result on Thursday, April 28.
Brokerages said the lender could also see its net interest income (NII) improve over 20 per cent YoY amid a decent uptick in loan book.
"We continue to expect strong loan growth at 6 per cent quarter on quarter, led by high risk-adjusted return on capital (RAROC) business, which includes SME and certain retail segments. On a YoY basis, we expect growth at 15 per cent YoY versus 17 per cent YoY last quarter," said a report by Morgan Stanley.
Axis Bank had reported net profit of Rs 2,677.1 crore in the year-ago quarter (Q4FY21), and Rs 3,614.2 crore in the previous quarter (Q3FY22).
NII, meanwhile, was Rs 7,555 crore in Q4 of FY21, and Rs 8,652.5 crore in Q3FY22.
Here's what key brokerages expect from Axis Bank's Q4 numbers:
Jefferies
The brokerage pegs Axis Bank’s NII at Rs 9,300 crore for the quarter under review, up 23 per cent YoY.
Operationally, it expects the pre-provision profit, excluding treasury income, to climb just 5 per cent on year to Rs 6,400 crore. Profit before tax (PBT) on the other hand is seen at Rs 5,500 crore, up 53 per cent YoY.
Nomura
Almost in-line with Jefferies, analysts here see NII rising 21.4 per cent YoY and 6 per cent QoQ to Rs 9,169 crore in Q4FY22. It expects net profit growth of 53.4 per cent YoY, at Rs 4,107 crore, on the back of 15 per cent YoY growth in core pre-provision operating profit at Rs 6,959 crore.
Treasury income, the brokerage said, will likely be lower on rise in bond yields. Net interest margin (NIM), on the other hand, will likely remain flat sequentially.
"Loan growth will likely be driven all segments, but the commentary will likely focus in unsecured and retail loan growth. We expect slippages to decline, but provisions will be higher (at Rs 1,850 crore vs Rs 1,335 crore in Q3FY22) to reduce net NPLs," it said.
Morgan Stanley
According to the brokerage, Axis Bank has proactively built an aggressive provisioning buffer. Asset quality performance will likely be better-than-expected. Against this backdrop, it expects lower slippages of Rs 3,500 crore (2.3 per cent of trailing loans, annualized) relative to Rs 4,150 crore (3.9 per cent) last quarter and normalized credit cost of 105 basis points.
Moreover, it expects improvement in core PPoP with growth at 11 per cent YoY as against 8 per cent YoY last quarter. It also pegs NIM at 3.48 per cent as against 3.53 per cent last quarter, partly owing to one-off liquidity floats last quarter.
Kotak Institutional Equities
Analysts at the brokerage expect loan growth at 15 per cent YoY with greater focus on retail and SME loans. NIM, they said, would be stable or may report marginal improvement led by shift towards higher yielding loans.
Operating profit growth is pegged at 3 per cent YoY at Rs 7,085.1 crore primarily due to lower treasury income and normalisation of operating expenses. Treasury income is seen at Rs 61 crore, down from Rs 789 crore YoY and Rs 367 crore QoQ.
Moreover, it expects strong commentary on asset quality performance and sees an improvement in non-performing loan ratios aided by stronger recovery/upgradations.
Edelweiss Securities
Their Q4FY22 earnings and loan growth estimates for Axis Bank are higher than consensus with loan growth of 8 per cent QoQ/17 per cent YoY at Rs 7.18 trillion. The brokerage also assumes flat margins (3.52 per cent) versus a small decline estimated by Street.
It is building in PPoP growth of 8 per cent QoQ/-3 per cent YoY at Rs 6,669 crore. Net profit is pegged at Rs 3,974 crore, up 48 per cent YoY.
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