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  • 20 Oct 2022
  • ICICIdirect Research

AXIS BANK REPORTED A ROBUST BUSINESS AND OPERATIONAL PERFORMANCE

AXISBANK - 1077 Change: -2.20 (-0.20 %)

News:

· Axis Bank has posted better than estimated numbers. Both business and operational performance stood robust, asset quality trend continued to improve. Net interest income was up 31.1% YoY and 10.4% QoQ to Rs 10360 crore on the back of 36 bps sequential improvement in net interest margins (NIMs). On a sequential basis other income reported significant growth of 31.4% and 4% YoY to Rs 3941 crore, mainly aided by fee income which grew 20% YoY. Trading loss was at Rs 86 crore in Q2FY23 vs a loss of Rs 84 crore in Q1FY23. 

·       Controlled opex and higher income levels resulted in decline in C/I ratio at 46% vs 49% a year ago and 52.5% in previous quarter. Provisions for the quarter increased 53% QoQ and declined ~68% YoY to Rs 550 crore. Credit cost declined by 3 bps QoQ and 16 bps YoY to 0.38%. Thus, PAT for the quarter came in at Rs 5330 crore (up 70% YoY, 29% QoQ) and was ahead of our estimates.

·       Asset quality has improved as GNPA and NNPA ratio declined 26 bps and 13 bps QoQ to 2.50% and 0.51%, respectively. The standard Covid-19 restructuring implemented loans stood at 0.38% of GCA vs 0.45% of GCA in Q1FY23. Slippages for the quarter were at Rs 3383 crore compared to Rs 3684 crore in the previous quarter. Recoveries and upgrades were at Rs 2826 crore vs Rs 2957 crores (QoQ) while write-offs were at Rs 1700 crores.  

·       Credit growth for the quarter stood at 17.6% YoY at Rs 7.30 lakh crore and was slightly above industry average on yearly basis. Mid corporate book grew 49% YoY, SME grew 28% YoY and retail grew 22% YoY. Within the retail segment personal loans, credit cards and rural loans saw healthy uptick. Deposit growth was at 10.1% YoY at Rs 8.10 lakh crore, in which CASA growth was at 14% YoY. CASA ratio increased to ~46% vs ~44% in Q2FY22 and Q1FY23. 

View:

 Performance is ahead of estimates. Focus on balance sheet growth along with improvement in RoA is expected to aid valuation. We remain bullish on Axis Bank future performance.

Impact:

Positive.