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Axis Bank reported mixed performance in Q2FY25

ICICIdirect Research 18 Oct 2024 DISCLAIMER

Axis Bank reported mixed performance in Q2FY25 results, with moderation in advance growth and decline in margins were offer by treasury gains and one-off tax inflow thereby aiding earnings.

While NII growth came at 9% YoY, growth in operating profit remained strong at 24 YoY, led by treasury gains of ₹1111 crore. Margins saw compression of 6 bps QoQ at 3.99%, of which 5 bps impact attributed to IT refund recorded in Q1FY25. Provisions totalled ₹2,204 crore, including contingent provision of ₹520 crore. PAT came at ₹6,918 crore, up 18% YoY, backed up by one-off tax write-back of ₹520 crore.

Slippages remained steady with 10 bps QoQ decline in GNPA at 1.44% & NNPA flat at 0.34%. Advances grew at 11% YoY (2% QoQ) to ₹9,99,979 crore, driven by retail (15% YoY) and SME (16% YoY) loans. Deposit accretion came at 14% YoY (2.3% QoQ) to ₹10,86,744 crore, supported by 21% YoY term deposit growth & 13% YoY rise in current account, with CASA ratio at 41%.

Treasury gains and tax write-back boosted operating profit. Utilization of tax-write off to strengthen balance sheet, control on opex and improvement in quality of deposit remain positive. While availability of deposit and elevated CD ratio do remain a challenge, management focus on control on opex and strong balance sheet provides comfort on bank’s ability to deliver steady return ratios.

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