Axis Bank Q2 Results Preview: NII Likely To Surge 10.8%; Lower Provisions To Trigger Muted PAT

On Thursday, October 17, Axis Bank is scheduled to release its financial year 2024-25 (FY25) results for the July-September quarter (Q2). On average, a number of brokerages anticipate that Axis Bank would release subdued earnings, mostly due to muted profitability generated by consecutively lower provisions.

Here is a preview of Axis Bank's Q2FY25 Results provided by a number of brokerages. In Q2 FY24, the bank disclosed a net profit of Rs 5,863.6 crore, and in Q2 FY24 and Q1 FY25, it saw net interest income (NII) of Rs 12,314.6 crore and Rs 13,448.2 crore, respectively.

Yes Securities

Yes Securities said, sequential loan growth will be in the 3.5% ballpark due to idiosyncratic growth trajectory. NII growth will be slightly slower than average loan growth due to rise in cost of deposits outpacing yield on advances.

"Consequently, NIM will be slightly lower sequentially. Sequential fee income growth will broadly match loan growth. Opex growth would slightly lag business growth. Slippages would be lower on sequential basis due to seasonality. Provisions will lower on sequential basis," the brokerage further added.

KRChoksey Research

KRChoksey Research said in the base case scenario it expects 8.7% YoY NII growth, driven by 12.1% YoY growth in advances for Axis Bank.

"However, we expect loan growth to moderate during the quarter while deposit growth outpaces credit growth. We see deposits to grow by 15.1% YoY/ 3.5% QoQ," said the brokerage.

"We expect NIMs to see a 15-bps decline during the quarter due to higher cost of funds. The cost-to-income ratio will likely reach 48.4% for Q2FY25E, as against 50.2% for Q2FY24," KRChoksey Research said.

"We expect profitability to grow by 6.5% YoY/ 3.5% QoQ in the base scenario, driven by sequentially lower provisions," the broking firm further added.

IDBI Capital

The brokerage said it is expecting NII to grow by 10.8% YoY led by higher interest income and expects advances and deposits growth of 13% & 14% YoY; expecting growth to improve sequentially.

The focus will be on sustainance of profitability and margin as deposit growth improves, as well as asset quality of Axis Bank, said IDBI Capital.

Kotak Institutional Equities

"We are building loan growth of 11 per cent YoY (2 per cent QoQ). We expect NIM to be stable (3.8 per cent) QoQ as we are past the re-pricing of funds. Fee income growth should be sluggish, reflecting weak loan growth," the brokerage said in a report.

"We expect slippages of Rs 5000 crore (2 per cent of loans), mostly led by retail. Key discussion areas: slippages, especially from the unsecured segment, deposit mobilization and NIM progression," it further added.

Axis Bank's Previous Quarter Performance

At Rs 13,448 crores, the bank's Net Interest Income (NII) increased 3% QOQ and 12% YoY. The Q1FY25 net interest margin (NIM) was 4.05%. The bank's core operating profit for the quarter ended June 30, 2024, increased 16% YoY to Rs 9,637 crores. Operating profit climbed to Rs 10,106 crores, or 15% YoY. In Q1FY25, net profit increased 4% YoY to Rs 6,035 crores from Rs 5,797 crores in Q1FY24.