Private sector lender Axis Bank is expected to post strong growth in net profit and interest income in the quarter ended March despite likely muted operating performance.
The net profit in the quarter is likely to grow 49 percent on year to Rs 3,977 crore, according to seven brokerages polled by Moneycontrol. Growth will largely be driven by a sharp decline in provisions.
The lender will report its earnings for the March quarter on April 28.
Analysts expect provisions to fall 56 percent on year to Rs 1,450 crore as the bank continues to see improvement in asset quality.
Brokerage firm ICICI Securities said that slippages as a percentage of advances could fall to 2.3 percent for the second half of 2021-22 as against 3.8 percent in the first half.
Motilal Oswal Financial Services expects gross non-performing assets ratio to come in at 3 percent as against 3.2 percent in the previous quarter. At the same time, net NPA ratio is seen at 0.8 percent as compared to 0.9 percent in the previous quarter.
On the topline, net interest income is likely to grow 22 percent on year to Rs 9,194 crore driven by strong loan growth. Analyst expects the lender to report a 7 percent sequential and 15 percent on year growth in loans led by retail and small business loan portfolio.
“Sustained focus on secured retail segments, better-rated corporate and tech-driven transformation initiative 'Sankalp' for MSMEs should aid overall growth,” ICICI Securities said in a preview note.
On the operating front, the performance is likely to be muted as the lender may report a mere 0.4 percent on-year growth in pre-provision operating profit to Rs 6,889.5 crore for the March quarter.
“Operating profit growth will be around 3 percent on year primarily due to lower treasury income and normalisation of operating expenses,” Kotak Equities said in a preview note. That said, net interest margin will remain stable in the quarter at 3.5 percent.
At 11:14 am, shares of Axis Bank were down 1.2 percent at Rs 765.95 on the National Stock Exchange.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.