Private sector lender Axis Bank is expected to report 50-60 percent YoY growth in profit on January 22 on account of lower provisions and the sequentially it is likely to turn profitable (against loss of Rs 112 crore in Q2FY20).
Net interest income, the difference between interest earned and interest expended, is seen rising in the range of 13-15 percent with loan growth in similar range and stable NIM YoY.
"Core operating performance will continue to be strong. Loan growth will be better than industry average given the continued momentum in retail growth and opportunistic pick up in corporate. NIMs will benefit from earlier capital rising, helping sustain core momentum," said Edelweiss.
According to Narnolia, advances may grow 15 percent YoY with each segment contributing to the growth.
Axis Bank raised QIP during the last quarter which has enhanced it tier 1 capital to 14.04 percent and CRAR to 18.45 percent which would provide cushion to bank in the tense environment, said the brokerage.
The management highlighted that the raised QIP would be idle for it to grow at around 20 percent CAGR for next 2-3 years.
Overall brokerages expect asset quality during the quarter to improve with decline in slippages.
Kotak expects slippages of around Rs 4,000 crore (3 percent of loans) mostly from "below investment grade book". "We expect an unchanged gross NPL and below investment grade loan portfolio."
Narnolia sees gross non-performing assets (NPA) falling 30bps sequentially to 4.7 percent and net NPA 10 bps QoQ to 1.9 percent for the quarter ended December 2019.
The stock gained 10 percent during the quarter, underperformed the Bank Nifty (up 10.5 percent).
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