Axis Bank Q2 Review - Re-Rating Imminent Due To Better Asset Quality: Centrum Broking
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Centrum Broking Report
Axis Bank Ltd.’s earnings were positive on asset quality though pre-provision operating profit was a miss led by a QoQ operational expenses spike.
Net interest income was ahead due to slightly better net interest margin while loan growth was in-line that was largely led by retail and small and medium enterprise.
Corporate growth was muted. Opex saw a 17% QoQ spike also driven by aggressive focus on collections and 7.5% of the spike was one-time in nature. Hence PPoP was a miss.
Axis Bank's overall asset quality surprised positively. While gross slippages were higher, jump in recoveries QoQ resulted in much lower net slippages that led to a sharp reduction in provisions.
Gross/net non performing asset improved QoQ by 32 bps/12 bps to 3.8%/1.2%.
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