Axis Bank Q4 Results Preview: Profitability Likely To Drop Led By Higher Opex; Asset Quality May Remain Stable

The private sector lender Axis Bank is going to declare its financial results for the quarter and year ended March 31, 2024. As per a report from KRChoksey Research, Net interest income (NII) growth of 8.7% YoY and 1.9% QoQ is anticipated from the bank. A strong 16.2% rise in advances, which suggests a robust credit demand and increased lending activity, is the main driver of NII growth. The rise in advances suggests that the bank can recognise and take advantage of market lending possibilities, which might result in higher profitability. The bank's capacity to produce sustainable revenue from its core lending activities and overall financial performance are both indicated positively by the substantial rise of its net interest income (NII). The bank's capacity to efficiently control its interest rate spread and maximise its interest income is demonstrated by the positive NII boost.

The brokerage is also expecting that contribution from a high yielding loan mix will slightly off set the NIM pressure. Axis Bank's cost-to-income ratio is likely to reach 49.3% for Q4FY24E as against 49.5% for Q3FY24 whereas in an underperforming scenario, Axis Bank's profitability is expected to decline 11.3% YoY, led by higher opex, KRChoksey Research said in a report. Despite a mix result outlook, the brokerage has initiated buy call on the shares of Axis Bank for a target price of Rs 1,275.

As per BOB Capital Markets Ltd, Axis Bank's loan growth remained strong at 21% YoY, indicating a healthy demand for credit.

Axis Bank's focus on deposit mobilization is expected to accelerate growth at 18% YoY, indicating a strong influx of funds. The bank's margin is likely to decline by 9bps QoQ due to the rising cost of deposits, potentially impacting profitability, said BOB Capital Markets in a report.

According to the brokerage, Axis Bank's cost-to-Income (C/I) ratio is expected to remain flat with some improvement, indicating efforts to manage expenses and improve efficiency. Further improvement in credit cost is expected on a sequential basis, suggesting a potential reduction in provisions for bad loans.

On the asset quality front, Axis Bank is likely to see some improvement in Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NPPA), indicating a positive trend in asset quality and potential recovery of bad loans, according to BOB Capital Markets.

A meeting of the Board of Directors of Axis Bank Limited will be held on Wednesday, April 24, 2024 to not only consider financial results for the quarter and year ended March 31, 2024 but also to recommend final dividend, if any, for the financial year ended March 31, 2024 and to raise funds by issue of debt instruments including but not limited to Bonds and Non-Convertible Debentures, in Indian Currency / Foreign Currency and by issue of equity shares / depository receipts and/or any other instruments or securities representing either equity shares and/or convertible securities linked to equity shares including through Qualified Institutions Placement (QIP) / American Depository Receipts (ADRs) / Global Depository Receipts (GDRs) program / preferential allotment, as per a regulatory filing.

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