Axis Bank Q3 Results Review - Opex Contained; Retail Deposits Traction A Monitorable: Dolat Capital

Dolat Capital Report

Axis Bank Ltd.’s operating profits grew by 52% YoY/20% QoQ, benefitting from net interest income growth of 32% YoY, higher other income (reversal of mark to market losses on corporate bonds), and contained opex. Net interest margin expanded by 30 basis points QoQ to 4.26%.

Loan growth at 4% QoQ was led by corporate (up 9% QoQ) and small and medium enterprise (5%), with muted growth in retail growth at 1%. Retail deposit growth continues to be a challenge (flat YoY/QoQ).

Gross slippages at 2% were in-line, but one-off provisions of Rs 3.4 billion and higher net slippages resulted in higher credit costs versus recent quarters.

Earnings tweaked marginally, factoring in higher NIM for FY23E and some moderation thereafter. Axis Bank has healthy contingent buffers at 0.7% of advances, aiding its earnings profile.

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