Axis Bank Q4: Revenue and Profit beat estimates, Dividend declared

Axis Bank Q4 Results

Earnings Analysis

Profits beat estimates: Axis Bank posted a 54% year-on-year (YoY) jump in net profit to post its highest quarterly profit of Rs 4,118 crore for the quarter ended March 2022. It is above the analysts' expectation of Rs 3,879.8 crore. Sequentially, the net profit increased by 14% from Rs 3,614 crore in Q3FY22.

Net interest income rises: A bank’s primary business is to borrow money and lend the same at a rate higher than the rate at which they borrowed. The income generated from this differential is known as net interest income. Net interest income (NII) for the bank rose 17% YoY to Rs 8,819 crore compared with Rs 7,537 crore in the year-ago quarter. Sequentially, the NII increased by 2%. Net interest margin (NIM) for the recently concluded quarter came in at 3.49%, a decline of 4 basis points QoQ and 2 basis points YoY. 

Other Income: Bank's Fee income for Q4FY22 grew 11% YoY and 12% QoQ to Rs3,758 crores. Retail fees grew 14% YoY and 14% QoQ and constituted 66% of the Bank’s total fee income.

NPAs: Gross NPA ratio fell to 2.82% for the Q4FY22, a decline of 88 basis points YoY and 35 basis points, sequentially. The net NPA ratio improved by 18 basis points QoQ and 32 basis points YoY to 0.73%. 

Slippages: Slippages are when a standard asset becomes an NPA owing to the borrower not paying interest for more than 90 days. Gross slippages during the quarter were Rs 3,981 crore, compared to Rs 4,147 crore in Q3FY22 and Rs 5,285 crores in Q4FY21. Recoveries and upgrades from NPAs during the quarter were Rs 3,763 crore.

Provisions: Specific loan loss provisions for Q4FY22 were Rs 602 crores compared to Rs 790 crores in Q3FY22. The Bank has not utilized Covid provisions during the quarter. It holds cumulative provisions (standard + additional other than NPA) of Rs 12,428 crores at the end of Q4FY22.

Deposits and Advances: Total deposits grew 19% YoY and 4% QoQ. Savings account deposits grew 19% YoY and 2% QoQ, current account deposits grew 19% YoY and 3% QoQ, and retail term deposits (RTD) grew 6% YoY and declined 1% QoQ.

The Bank’s advances grew 15% YoY and 6% QoQ to Rs 7.07 lakh crore as of 31st March 2022. The Bank’s loan to deposit ratio stood at 86%. Retail loans grew 21% YoY and 9% QoQ to Rs 3.99 lakh crore and accounted for 57% of the net advances of the Bank.

CASA: CASA capital is the cheapest source of capital for banks. The higher the number, the more profit a bank can earn. The ratio of current account and savings account deposits stood at 45%, up 160 basis points compared to a year ago. CASA deposits grew 16% YoY and 7% QoQ.

Capital Adequacy Ratio (CAR): The CAR and CET1 ratio as of 31st March 2022 was 18.54% and 15.24%, respectively.  

Dividend: The Board of Directors has recommended a dividend of Rs 1 per equity share of the face value of Rs 2 per equity share for the year ended 31st March 2022.

Updates from Key Subsidiaries 

  • Axis AMC - Axis AMC’s average AUM for the quarter grew by 32% YoY to Rs 2,59,818 crore. Its FY22 PAT grew 47% YoY to Rs 357 crore from Rs 242 crore in FY21.
  • Axis Finance - Axis Finance remains well-capitalized with a Capital Adequacy Ratio of 20%. The asset quality metrics remain stable with net NPA at 0.46% with near-zero restructuring. Axis Finance Q4FY22 PAT was Rs 113 crores, up 56% YOY. FY22 PAT grew 72% YOY to Rs 364 crores from Rs 211 crores in FY21.
  • Axis Capital - Axis Capital completed 44 ECM transactions in FY22. Its PAT for FY22 grew by 20% YoY.
  • Axis Securities: Axis Securities’ broking revenues for Q4FY22 & FY22 grew 36% and 56% YoY to Rs 179 crore and Rs 662 crore, respectively. Net profit for Q4FY22 & FY22 grew by 21% and 40% YoY to Rs 58 crore and Rs 232 crore, respectively.