Axis Bank Quarterly Results: Profit jump 91% beating estimates

Axis Bank Q1 Results
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Axis Bank reported its Q1 net interest income, and earnings were above Street expectations. The Axis Bank stock tanked 3% on Tuesday post the earnings.

Key highlights of Axis Bank's earnings: 

  • Net Profit: Rs 4,125 crore, up 91% year-on-year
  • Net Interest Income: Rs 9,384 crore, up 21% year-on-year
  • Net NPA: Declined to 0.64%

Below are details from Axis Bank's Q1FY23 quarterly results:

Axis Bank Q1 Results: Profits beat estimates 

Axis Bank posted a 91% year-on-year (YoY) increase in its net profit to post its highest quarterly profit of Rs 4,125 crore for the quarter ended June 2022. It is above the analysts' expectation of Rs 3,597.7 crore. Sequentially, the net profit was flat, in Q4FY22 it was Rs 4,118 crore.      

Axis Bank Q1FY23 Results: Net interest income rises

 Axis Bank's primary business is to borrow money and lend the same at a higher rate. The income generated from the difference between the two is known as net interest income. Net interest income (NII) for the bank rose 21% year-on-year to Rs 9,384 crore compared with analysts' estimate of Rs 9,186.6 crore. Sequentially, the NII increased by 5%. Net interest margin (NIM) for the June quarter came in at 3.60%, up 11 basis points year-on-year and 11 basis points sequentially.

Axis Bank Q1 Earnings: Other Income

 Bank's Fee income for Q1FY23 increased 34% year-on-year to Rs 3,576 crore. Retail fees grew 43% year on year and constituted 66% of the Bank’s total fee income. Retail cards and payments fees increased by 62% on-year. The Corporate & Commercial banking fees together grew 19% compared to the year-ago period. Overall, non-interest income (comprising of fee, trading profit, and miscellaneous income) for Q1FY23 stood at Rs 2,999 crore.

Axis Bank Quarterly Results: NPAs 

Gross NPA ratio fell to 2.76% for the Q1FY23, a decline of 6 basis points sequentially. The net NPA ratio improved by 9 basis points QoQ and stood at 0.64%. 

Axis Bank Q1 Results: Slippages 

Slippages are when a standard asset becomes an NPA for the bank as the borrower is not paying interest for more than 90 days. Gross slippages during the June quarter were Rs 3,684 crore, compared to Rs 3,981 crore in Q4FY22 and Rs 6,518 crore in Q1FY22. Recoveries and upgrades from NPAs during the June quarter were Rs 2,957 crore.

Axis Bank Q1FY23 Results: Provisions 

Specific loan loss provisions for Q1FY23 were Rs 777 crore compared to Rs 602 crore in Q4FY22. The Bank has not utilized Covid provisions for the June quarter. It held cumulative provisions (standard + additional other than NPA) of Rs 11,830 crore at the end of Q1FY22. Credit costs for the quarter ended June stood at 0.41%, declining by 129 bps year-on-year.

Axis Bank Quarterly Results: Deposits and Advances 

Total deposits grew by 14% year-on-year on a quarterly average balance (QAB) basis and by 13% year-on-year on a period-end basis. Savings account deposits grew 16% on-year and 4% sequentially. Current account deposits grew 15% on-year.

The Bank’s advances grew 14% year-on-year to Rs 7.01 lakh crore at the end of the June quarter. The Bank’s loan-to-deposit ratio stood at 87%. Retail loans grew by 25% year-on-year and 3% sequentially to Rs 4.13 lakh crore and accounted for 59% of the net advances of the bank.

Axis Bank Q1 Results 2022: CASA

 CASA capital is the cheapest source of capital for every bank. If the number is high, it means that banks can earn more profit. The ratio of current account and savings account deposits stood at 43%, up 53 basis points compared to a year ago. 

Axis Bank Q1FY23 Results: Capital Adequacy Ratio (CAR)

 The CAR and CET1 ratio as of 30 June 2022 was 17.83% and 15.16%, respectively.  

Axis Bank Quarterly Results: Network

 Axis Bank had a network of 4,759 domestic branches and extension counters situated in 2,702 centers compared to 4,600 domestic branches and extension counters situated in 2,628 centers compared to the year-ago period. For the quarter ending June, the Bank had 10,161 ATMs and 6,063 cash recyclers spread across the country. 

Updates from Key Subsidiaries 

  • Axis AMC - Axis AMC’s average AUM for the June quarter grew by 18% year-on-year to Rs 2.45 lakh crore. Its Q1FY23 PAT grew 20% on-year from Rs 73 crore to Rs 88 crore in Q1FY23.
  • Axis Finance - Axis Finance remains well-capitalized with a Capital Adequacy Ratio of 19%. The asset quality metrics for the June quarter remained stable with net NPA at 0.46%. Axis Finance Q1FY23 PAT was Rs 95 crores, up 59%. 
  • Axis Capital - Axis Capital completed 10 Investment Banking transactions including 5 equity market transactions in Q1FY23. Its PAT for June quarter stood at Rs 34 crore.
  • Axis Securities: Axis Securities’ broking revenues for the June quarter grew 7% on-year and stood at Rs 158 crore. PAT for Q1FY23 stood at Rs 39 crore.

Brokerage Radar

Edelweiss: The brokerage firm has given a BUY call on Axis Bank with a target price of Rs 970 per share. It said that while growth in retail and mid-corporate loans was strong, large corporate loans fell 10% sequentially as state banks sacrificed risk-based pricing to gain share. The stock’s discount to peers will narrow if the bank sustains the core performance of Q1FY23.

Nirmal Bang: The bank is confident that with rates increasing, pricing stabilizing and corporate demand reviving, it is well positioned to chase growth in the corporate segment. Valuation comfort underpins our BUY stance on Axis Bank despite lower ROA than HDFC Bank and ICICI Bank. We maintain BUY with a target price (TP) of ₹990.

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