Axis Bank Q3 Review - Margin Expansion, Lower Credit Cost Aid Profitability: Systematix
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Systematix Research Report
Axis Bank Ltd.’s Q3 FY22 profitability can be largely attributed to a reduction in funding costs and expansion in credit yield, though offset somewhat by higher operating overheads due to technology-related spending.
The bank aspires to expand high-yielding credit books like small business banking, loan-against-property and unsecured personal loans at a faster pace, leading to better credit yield and margins.
On the liability front, it needs to push the peddle harder as retail term deposit growth has been slow; in a rising interest rate and credit offtake scenario, it would get difficult to raise the term deposits.
Axis Bank witnessed a rise in borrowing composition in its net demand and time liabilities. On the asset quality front, the gross delinquency rate fell to 293 basis points from 391 bps in Q2 FY22, while the net delinquency rate remained high at 61 bps on a sequential basis.
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