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Axis Bank Q4 preview: Lower provisions could support profitability, double-digit growth likely in NII

Kotak expects commentary on collections to be strong along with a positive outlook on earnings normalisation and asset quality for FY22.

April 27, 2021 / 08:22 AM IST
Axis Bank (Representative image)

Axis Bank (Representative image)

 
 
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Private sector lender Axis Bank is likely to report a standalone profit in the range of Rs 1,500-3,000 crore for the quarter ended March 2021, against a loss of Rs 1,387.8 crore in the corresponding period. The lower provisions are expected to support profitability.

Net interest income (NII) and pre-provision operating profit (PPoP) in Q4 FY21 are seen rising in the range of 10-14 percent compared to the year ago.

"We expect loan growth at 7 percent year-on-year (YoY) with a greater focus on retail. We expect NIM to be unchanged quarter-on-quarter (QoQ) at 3.6 percent led by loan composition and lower funding costs. Pre-provision operating profit growth is expected at around 13.5 percent YoY led by better cost controls," said Kotak Institutional Equities which expects a 13.2 percent YoY growth in NII and profit at Rs 3,027.3 crore for the March quarter.

ICICI Direct expects Axis Bank to post advances growth of around 7 percent YoY, slightly above industry, adhering to selective lending, tightening underwriting standards and cautious approach in commercial lending. Deposits are expected to rise by 15 percent YoY with stable CASA at 44.4 percent, said the brokerage.

Prabhudas Lilladher expects NII growth of 12 percent YoY but better QoQ at 3 percent, some reversals expected which should marginally impact NIMs.

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"Slightly lower provisions should help earnings with the base quarter having high provisions," said the brokerage which sees profit at Rs 1,959.7 crore and NII growth at 12 percent YoY.

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At the asset quality front, gross non-performing assets (NPA) are likely to increase to 4.5-4.7 per cent due to the lifting of standstill norms. Gross NPA in December quarter stood at 3.4 percent.

Kotak expects slippages of around Rs 6,000 crore (around 4.5 percent of loans) adjusted for slippages in the previous quarter. The brokerage expects commentary on collections to be strong along with a positive outlook on earnings normalisation and asset quality for FY22.



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Moneycontrol News
first published: Apr 27, 2021 08:22 am
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