Axis Bank Q4 preview: Profit seen down over 50%; NPAs, management commentary key focus

作者:Emily 時間:2018-04-27 16:52:59 標籤: 分類:

Axis Bank’s March quarter net profit is expected to decline 56 percent year-on-year to Rs 534 crore, weighed down by flat growth in net interest income and a deterioration in asset quality, according to a Reuters poll of equity analysts.

Axis, India's third-largest private lender will report its fourth quarter numbers on Thursday. Net interest income is expected to rise by a tepid 4 percent to Rs 4,909 crore, according to the Reuters poll.

The results will be closely watched, given the persistent pressure on asset quality, and the recent controversies relating to the senior management.

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Earlier this month, the bank’s board cut CEO and MD Shikha Sharma’s tenure at the direction of the RBI. Also, there are media reports about Deputy MD V Srinivasan having put in his papers.

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Analysts expect the pressure on asset quality to continue and a rise in slippages turning into non-performing assets, especially after the RBI's new framework for resolution of NPAs.

Provisions towards bad loans during the fourth quarter are estimated to be at Rs 3,527 crore as compared to Rs 2,754 crore in the previous quarter. For the full year, the provisions are likely to be at Rs 11,725.3 crore versus Rs 12,117 crore in FY17.

Gross NPAs stood at 5.28 percent for the quarter ended December 2017, and at 5.04 percent for the quarter ended March 2017. Net NPAs were at 2.56 percent at the end of December 2017 and 2.11 percent at the end of March 2017.

For the full year, Axis Bank’s net profit is expected to dip slightly to Rs 3,598.4 crore, compared with Rs 3,679 crore in FY17.

Analysts expect Axis Bank's loan growth rate to be around 18-19 percent driven by continued strength in retail porfolios.

Net interest margins (NIMs) are expected to see some pressure from 3.4 percent sequentially as cost of funds have started reversing.

"We expect slippages to remain at elevated levels (nearly 5.5 percent annualised slippage ratio) as the bank proceeds to clean up its balance sheet, leading to high credit cost," a Sharekhan report said.

Key things to watch out for:

1. Gross NPA and Net NPA figure will be key to the bank's future outlook on its balance sheet

2. Loan growth to be better than industry given the continued momentum in retail growth. Corporate book to remain under pressure

3. Management's outlook on profit, margins and NPAs.

4. Views of the management on the controversy surrounding its CEO and Sharma's successor.


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