January 15, 2013 / 12:26 IST
Moneycontrol Bureau
Private sector lender
Axis Bank's third quarter (October-December) net profit is expected to rise around 17% year-on-year to Rs 1,291 crore. Net interest income (NII) or the difference between interest earned and paid out, is likely to grow 14% y-o-y to Rs 2,445 crore, according an analyst estimate by CNBC-Awaz.
"Any increase in the share of retail business will add to its ratings," Nilanjan Karfa, a banking analyst from Bric Securities told
moneycontrol.com.
"Retail is relatively safer bet. Loan book should expand at a decent rate of about 21%. Overall asset quality is looking good and no ugly surprise is expected. However, we need some clarity on its exposure to GMR Infrastructure project in Maldives," he said.
Axis Bank had lent about Rs 1,925 crore to GMR Infrastructure for building Male airport. Later, the project hit a roadblock with the government of Maldives and it led to cancellation of the project contract. Recently, Axis Bank, the solo lender, has reportedly sent legal notice to Maldives government to recover the credit amount given to GMR.
Besides, the bank had significant credit exposure to debt restructuring cases like SevenHills Healthcare (Rs 460 crore), Deccan Chronicle (at around Rs 400 crore) and Suzlon. According to analysts, the market has already factored in those shocks.
Total problem assets generation (slippages and restructuring) expected to be in-line with guidance. Expect slippages and fresh restructuring to be in line with the previous quarter and operating expenses growth to slow due to lower investments, suggested the analyst poll.
Non-interest income is also expected to be robust as well driven by higher fee income from retail businesses
"Increase in retail business will also ensure fee income. Currently, the share of retail lending stood around 26% of the book. It should increase further," said an analyst associated with a large brokerage.
Axis Bank shares rose more than 48% in the last one year as against 43% rise in the Bank Nifty, the broader index.
saikat.das@network18online.com Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
