Axis Bank Q3 preview: PAT likely to jump 30% led by strong operating performance

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MUMBAI: Private sector lender Axis Bank is expected to report a sharp jump in net profit and net interest income in the quarter ended December, helped by lower provisions and a firm operating performance.

The lender is likely to report a 30 per cent year-on-year increase in net profit to Rs. 2,281.6 crore, with its net interest income expected to climb 17 per cent to Rs. 7,537 crore, according to estimates from 14 brokerages polled by ETMarkets.com.

Axis Bank will report its earnings on Wednesday.

Axis Bank’s aggregate provision buffer of Rs. 10,800 crore prior to the reporting quarter means that the lender will provide less for any COVID-19-related stress in its loan book, which will shore up its profits, said analysts. Brokerage firm Kotak Institutional Equities expects the lender’s loan-loss provisions to plummet 36.2 per cent on a year-on-year basis to Rs. 2,231 crore in the December quarter.

Analysts expect slippages in the loan book to be around 4.5-5.0 per cent of advances in the quarter with the gross non-performing assets ratio seen at 3.8-4.8 per cent. The bank’s net non-performing assets ratio could come in at 1.0 per cent. The lender had in the previous quarter said that loan restructuring under the special window provided by the RBI will be contained below 2 per cent of advances.

Axis Bank’s operating performance in the quarter is expected to be strong as analysts expect its pre-provisioning operating profit to rise nearly 17 per cent on year to Rs. 6,680.3 crore, helped by the lender’s cost controls.

Analysts said investors will watch out for Axis Bank’s commentary on the asset quality and the restructured portion of the loan book. At the same time, investors will also be keen to understand the demand for credit, as analysts expect a sequential recovery in loan growth in the quarter for Axis Bank.





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