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Axis Bank Q1 Review – Loan Growth Muted; Lower Provisions Drive Earnings Beat: Motilal Oswal

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Axis Bank Ltd. reported a profit after tax of Rs 41.2 billion (up 91% YoY, 20% beat), driven largely by lower provisions, which fell 89% YoY, while net interest income/pre-provision operating profit stood in line.

Opex remains elevated as the bank is investing in the business and technology.

Business growth was muted, with loans and deposits down sequentially. The corporate and small and medium enterprise book saw a QoQ decline, while the retail segment saw a growth of 3% QoQ.

Fresh slippages fell to Rs 36.8 billion, which, coupled with healthy recoveries and upgrades, enabled an improvement in asset quality ratios.

The restructuring book remains controlled at 0.45%, which, along with an additional provision buffer, should rein in credit cost. We expect Axis Bank to deliver a return on asset/return on equity of 1.6%/16.7% in FY24E.

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