Axis Bank Q4 Results Review: Systematix Maintains 'Hold' Rating But Hikes Target Price

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Systematix Report

Axis Bank Ltd. reported Q4 FY25 PAT of Rs 71 billion (13% QoQ, flattish YoY) which was higher than our estimates mainly due to lower provisions. While net interest income growth was muted at 1.5% QoQ, 5.5% YoY mainly due to weak loan growth, PAT growth of 13% qoq, flat yoy was mainly supported by higher fee income growth and lower provisions which was partly offset by higher opex.

Other key highlights were:

1. Loan growth of 2.6% QoQ, 8% YoY was weak and was lower than system loan growth of 11% as of 21-Mar’25.

2. Deposit growth was strong sequentially at 7% QoQ, 10% YoY mainly led by seasonally strong CASA growth of 10.5% QoQ, 4% YoY.

3. Reported NIM increased to 3.97% (+4bps QoQ) supported by +2bps increase in spreads and +2bps benefit from lower interest reversal on slippages.

4. Fee income increased by 16% QoQ, 12% YoY mainly led by strong growth in retail fee income (+22% QoQ, 14% YoY) while corporate fee growth was 1.7% QoQ, 8% YoY.

5. Opex/assets increased to 2.51% (+12bps QoQ) mainly due to increase in other overheads by +13.5% QoQ, 7.5% YoY due to higher PSLC purchase costs of Rs 5.91 billion due to shortfalls in subsegment PSL requirements.

6. GNPA reduced to 1.3% (-18bps QoQ) with significant reduction in wholesale GNPA at 0.92% (-46bp QoQ).

7. Credit costs reduced to 0.53% vs 0.87% qoq due to provision reversals of Rs 8 billion (~30bps benefit) on government guaranteed SRs.

8. The bank delivered FY25 RoA of 1.74% vs 1.78in FY24.

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