Axis Bank Q2 Results Preview: Net profit likely to rise 7% with steady asset quality; here is what else to expect

Axis Bank, the country's fourth largest private sector lender by market value, is all set to report its financial results for Q2 on October 25. Here's what to expect.

Axis Bank is expected to report a strong set of Q2 numbers on October 25. | Image: Reuters

Axis Bank—the country's fourth largest private sector lender by market capitalisation (mcap)—is scheduled to report its financial results for the July-September period on Wednesday, October 25, as Dalal Street returns to trade after a mid-week holiday. Analysts widely expect the private bank to stage a strong financial performance for the quarter with steady asset quality but a minor impact on its margin owing to a higher cost of funds.

According to Zee Business research, Axis Bank is likely to report a standalone net profit of Rs 5,700 crore for the second quarter of the current financial year, marking an increase of 6.9 per cent compared with the corresponding period a year ago. The analysts expect the lender's net interest income (NII)—or the difference between interest earned and interest paid—to increase 15 per cent on a year-on-year basis to Rs 11,910 crore, with 20-22 per cent growth in loans as well as deposits.

Axis Bank's net interest margin (NIM)—a key measure of profitability for financial institutions—is estimated to be at 3.9-3.95 per cent for the September quarter, as against 4.1 per cent for the previous three months, amid a rise in provisions, higher wage expenses and elevated credit costs, according to the research.

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Axis Bank is widely expected to register a slight improvement in asset quality during the period. Zee Business analysts estimate the bank's gross non-performing assets (GNPAs) to come in at 1.9 per cent of its total loans for the July-September period as against 1.96 per cent for the previous three months, and its net non-performing assets (NNPAs) to decrease by 10 basis points sequentially to 0.31 per cent.

The analysts peg a sequential increase of 10-15 per cent in the lender's provisions for the fiscal second quarter.

How Axis Bank performed in the June quarter

Axis Bank began the financial year with a weak quarterly performance. The lender registered a 40.5 per cent year-on-year increase in standalone net profit to Rs 5,797.1 crore for the April-June period while its net interest income grew 27.4 per cent to Rs 11,958.8 crore, according to a regulatory filing.

Zee Business analysts had estimated the bank's quarterly net profit at Rs 5,840 crore and NII at Rs 12,000 crore for the fiscal first quarter.

Its NIM slipped by 12 bps sequentially to 4.1 per cent.

Axis Bank shares: Past performance

The lender's stock—traded with the symbol AXISBANK—finished the September quarter with a gain of five per cent, better than a 2.4 per cent rise in the headline Nifty50 index as well as a 0.4 per cent decline in the high-beta Nifty Bank gauge.

As of October 23, the Axis Bank stock had grown 6.9 per cent in the past year, underperforming a 9.2 per cent gain in the Nifty but outperforming a 4.9 per cent rise in the banking index.

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