Axis Bank Q3 results: Analysts expect flat loan, deposit growth, weak NIM

Axis Bank Q3 results expectations: There are expectations that Axis Bank Q3 results could be a weak set of numbers, dragged by weak loan and deposit growth, margin pressure and poor asset quality

Axis Bank Q3 preview: Axis Bank is set to kick start the December quarter results for the current financial year (FY25), for large-cap private banks, when it will announce its Q3 results on Thursday, January 16, 2025.

 

There are expectations, as per analysts, that Axis Bank Q3 results could be a weak set of numbers, dragged by weak loan and deposit growth, coupled with margin pressure, and poor asset quality.

 

During the December quarter of the previous financial year (Q3FY24), Axis Bank reported a net profit of Rs 6,071 crore, supported by a net interest income (NII) of Rs 12,532 crore.

 

 

Sequentially, Axis Bank’s Q2FY25 net profit stood at Rs 6,918 crore, and NII at Rs 13,483 crore.

 

Its pre-provision operating profit (PPoP) was Rs 9,141 crore in Q3FY24 and Rs 10,712 crore in Q2FY25.  ALSO READ: Infosys Q3 Preview: Profits may jump by 11%, revenues to rise by 6%

 

Here is Axis Bank Q3 results expectations:

Citi India

The global brokerage expects Axis Bank Q3 profit to come at Rs 6,304.6 crore, up 4 per cent year-on-year (Y-o-Y) but down 9 per cent quarter-on-quarter (Q-o-Q).

 

Operationally, Axis bank Q3 NII may come at Rs 13,620.3 crore, up 9 per cent Y-o-Y and 1 per cent Q-o-Q. The softness, Citi said, could be on the back of just 2 per cent Q-o-Q loan growth and 3 per cent Q-o-Q deposit growth.

 

Loan Book is seen rising to Rs 10.24 trillion, up 10 per cent Y-o-Y from Rs 9.32 trillion seen at the end of Q3FY24. In the September quarter of the current fiscal, loan book was Rs 9.99 trillion.

 

Similarly, Deposits are seen at Rs 11.19 trillion, compared with Rs 10.05 trillion Y-o-Y and Rs 10.86 trillion Q-o-Q.

 

“With increased delinquencies in personal loans/corporate customers, aggressive write-off policy, and the management’s guidance of not utilising buffer provisions, we expect credit cost to be elevated in Q3FY25 at ~70bps. We, however, build moderation from Q2, where it created an additional buffer. Besides, continuous deposit repricing and mix change in favour of secured assets could keep net interest margins (NIMs) under pressure,” the brokerage said.

 

It builds-in 5-7bps of NIM contraction Q-o-Q and around 8bps Y-o-Y.

 

On the asset quality front, Citi India sees Axis Bank Q3 gross non-performing asset (GNPA) ratio inching up to 1.6 per cent from 1.4 per cent Q-o-Q. Similarly, NNPA ratio may rise to 0.4 per cent from 0.3 per cent Q-o-Q.

 

The bank’s return on asset (RoA) may decline to 1.7 per cent from 1.9 per cent Q-o-Q and 1.8 per cent Y-o-Y. Return on Equity (RoE), too, may slip to 14.9 per cent from 17.1 per cent Q-o-Q and 17.3 per cent Y-o-Y.

Nomura

Similarly, Nomura expects Axis Bank’s Q3FY25 net profit to fall 10 per cent Q-o-Q, but up 3 per cent Y-o-Y, to Rs 6,240 crore. This would be weighed by just 1 per cent Q-o-Q/9 per cent Y-o-Y gain in NII to Rs 13,610 crore.

 

PPoP, too, is seen dropping 3 per cent Q-o-Q to Rs 10,400 crore. On a Y-o-Y basis, this would be a rise of 14 per cent.

 

According to Nomura, Axis Bank Q3 provisions may surge 102 per cent Y-o-Y to Rs 2,080 crore, taking a slight cut of 6 per cent over the September quarter.

 

“Operationally, loan growth is expected to be softer at 10 per cent Y-o-Y/2 per cent Q-o-Q, compared with peers, led by lower deposit growth of 11 per cent Y-o-Y/2 per cent Q-o-Q. Credit cost may stay elevated, but contained at 0.9 per cent. NIMs could decline ~4bp Q-o-Q,” Nomura said.

 

Prabhudas Lilladher

Here, too, analysts at Prabhudas Lilladher expect Axis Bank Q3 profit to clock a meagre growth of 6 per cent Y-o-Y, but 7 per cent Q-o-Q contraction, to Rs 6,436.3 crore.

 

NII is seen rising 11 per cent Y-o-Y and 3 per cent Q-o-Q, in-line with loan book growth of 10.5 per cent Y-o-Y and 3 per cent Q-o-Q.

 

Prabhudas Lilladher, too, anticipates a sharp rise in provisions on a yearly basis. It pegs the value at Rs 1,800 crore, up 75 per cent Y-o-Y over Rs 1,028.3 crore. On a sequential basis, though, this would be a drop of 18.3 per cent from 2,204.1 crore.

 

Credit costs are seen elevated at 70bps versus 44bps Y-o-Y and 88 per cent Q-o-Q.

Sharekhan

According to Sharekhan analysts, asset quality outlook, and deposit growth trajectory would be the two major monitorables during Axis Bank’s Q3 results.

 

It pegs NII at Rs 13,831 crore; PPoP at Rs 10336 crore; and net profit at Rs 6,226 crore.