Axis Bank is set to report its second-quarter results later in the day on Thursday, October 17. Investors will have their eye on loan growth and net interest margins (NIM).

What Happened: Axis Bank is expected to report an 8% year-on-year increase in its net profit for the quarter ended September, based on the average of analyst estimates. The uptick in the bank’s bottom line is likely to be driven by growth in net interest income (NII), non-interest income, and lower slippages.

NII for the quarter is projected to rise by 10% year on year. Although slippages are expected to increase by 29%, they are predicted to decline by 12% sequentially.

Loan growth for the quarter is expected to be relatively subdued, with a 2% increase quarter on quarter but an 11% rise year on year. In the preceding June quarter, Axis Bank reported a net profit of ₹6,035 crore, reflecting an increase of 4% from a year ago, while NII rose by 12% to ₹13,448 crore.

Analyst Crunch Numbers: Kotak Equities estimates loan growth at 11% year on year and 2% quarter on quarter. It expects NIM, the difference between interest earned on loans and interest paid on deposits, to remain stable at 3.8% quarter on quarter, as the re-pricing of funds has been completed.

It expects fee income growth to be sluggish due to weak loan growth and pegs slippages at ₹5,000 crore, with retail loans leading the way. Key areas of focus include slippages, particularly from the unsecured segment, deposit mobilisation and NIM progression, according to the brokerage firm.

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Nuvama predicts that NII will grow 1.8% quarter on quarter and 11.2% year on year, with a margin decline of 3 basis points. It expects the growth in NII and non-interest income and lower provisions to result in higher profit after tax. Loan growth is likely to be under 1% quarter on quarter, it added.

Motilal Oswal expects the credit-deposit ratio to remain elevated, along with cost ratios. Margins are expected to moderate in the second quarter, while asset quality ratios will be closely monitored, according to the research firm.

More Estimates: Yes Securities forecasts a 14.4% year-on-year rise in Axis Bank’s net profit to ₹6,710 crore, with NII projected to grow 11.7% to ₹13,751 crore. The brokerage expects pre-provision operating profit (PPoP) to reach ₹10,367 crore, representing a 20.1% increase.

Loan growth is expected to be around 3.5% sequentially, but NII growth may lag due to a rise in deposit costs, it added. NIM is also expected to see a slight sequential drop, while fee income growth is anticipated to align with loan growth, analysts at Yes Securities.

Emkay Global projects a 6.9% increase in net profit to ₹6,270 crore from a year ago, with NII growing by 10.4% to ₹13,593 crore. The brokerage expects NIM to fall to 4%, down from 4.1% in the June quarter.

It believes that slower credit growth and elevated provisions could restrain earnings growth, with slippages moderating quarter on quarter, but recoveries remaining weak.

Elara Securities predicts an 8.7% year-on-year rise in net profit to ₹6,375 crore, with NII growing by 9.4% to ₹13,466 crore. The brokerage expects softer quarter-on-quarter loan book growth, following broader industry trends, and forecasts a 34 basis point decline in NIM due to rising funding costs.

It also anticipates that operating expenses will stabilise, supporting core PPoP growth, while asset quality and credit costs will be closely watched as key factors moving forward.

Price Action: Axis Bank’s share price was down 1.24% at ₹1,138.85 in early trade on Thursday.

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