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Prabhudas Lilladher Report
Axis Bank Ltd.'s core earnings were better driven by net interest margin beat and lower provisions led by steady asset quality.
Loan growth at down 0.9% QoQ was lower as corporate declined since Axis Bank evaded pricing pressure while higher yielding retail (small business banking, agri, credit card, and personal loan) saw strong traction, which might continue.
Axis Bank suggested that even if corporate growth is boosted, spread would not be diluted. Preference for profitability over growth could bode well, as systemic asset quality risks are benign.
Cost to assets would remain elevated although target is to reduce it from 2.2% to 2.0% over FY22-25E. Asset quality improved QoQ with controlled net slippages and reduction in stressed pool.
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