Here's what to expect from Axis Bank Q4 earnings

Moneycontrol Bureau

India's third largest private sector lender Axis Bank is expected to report 12 percent year-on-year (YoY) rise in its fourth quarter net profit at Rs 1431. Net interest income or the difference between interest earned and paid out, would rise 22 percent to Rs 2,615 crore, according to an average of analysts' estimate by CNBC TV18.

"In the recent past, the bank was facing some credit quality threat," Dinesh Sukhla, a banking analyst from Sharekhan brokerage told moneycontrol.com.

"We need to see how much it is adding to its restructured loan book in Q4. Moreover, it is aggressively expanding retail loans. Whether retail loans (primarily auto and home) too are bringing some stress assets, it is yet to be seen," he said.

Axis Bank, according to a section of market analysts, has credit exposures in companies like GMR, Abhijit group and Suzlon. Big projects in those companies are believed to be stuck and so is the debt repayment capabilities. However, Suzlon Energy of late raised overseas funds to repay its debt.

"It is not clear how those accounts are performing. If those slip into non-performing asset category, we need to know whether Axis has provided for it. Besides, the bank has fund based credit exposure to infrastructure companies. It is to the tune of 5-6% of their total loan book and infra loans are not performing well as a whole," said a banking analyst from a domestic brokerage.

Axis Bank is likely to grow its loans and deposits in the range of 17-18%.  In October-December quarter, loans grew 21% YoY with retail loans spiking by more than 45%. Net interest margin could marginally increase as the lender was busy meeting priority sector lending target (40%) as mandated by RBI.

The bank will announce its Q4 earnings on Wednesday at around 5 pm.

saikat.das@network18online.com