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Axis Bank Q1 preview points to profit lift, but NIM seen slipping
Analysts expect Axis Bank’s net interest margin to fall, with seasonally higher slippages and deposit repricing driving pressure even as loan and deposit growth remains strong.
Axis Bank is set to report its April to June quarter results on Saturday, 18 July, and most analysts expect overall numbers to look healthy thanks to strong growth in loans and deposits, according to LiveMint Markets. However, the key watch item heading into the print is net interest margin, which multiple brokerages said may decline. They linked the expected NIM pressure to factors including seasonally higher slippages in the first quarter, deposit repricing and competitive funding costs. In pre-result business updates, Axis Bank reported gross advances of ₹ 12.73 lakh crore, up 18.8% year-on-year, with quarter-on-quarter growth of 2.3%. Total deposits rose 18.2% year-on-year to ₹ 13.73 lakh crore, increasing 2.8% on a sequential basis, helped by CASA growth of 11.4% year-on-year to ₹ 5.22 lakh crore, though CASA fell 1.4% quarter-on-quarter. Motilal Oswal Financial Services expects NIM to decline by 5 basis points quarter-on-quarter, even as net interest income is forecast to rise 10.6% year-on-year. Kotak Institutional Equities expects profit growth of 16.8% year-on-year but a quarterly decline of 4.1%, while it projects NII up 9.2% year-on-year and a decline in NIM of 28 basis points year-on-year and 8 basis points quarter-on-quarter, with management focus areas likely to include slippages and asset quality outlook, as well as loan growth, FCNR deposits and RoE normalization to peers.