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Motilal Oswal Report
Axis Bank Ltd. reported an in line Q1 FY22, with a profit after tax of Rs 21.6 billion and core pre provision operating profit growth of 13% y-o-y.
Business growth remains flattish, while margin moderated by 10 basis point q-o-q due to interest reversals, excess liquidity, and change in its product mix.
Fresh slippages stood elevated at Rs 65.2 billion (Rs 52.8 billion in Q4 FY21), led by the retail segment (84% of total).
As a result, asset quality ratios deteriorated by ~15bp q-o-q.
Restructuring stood at 0.33% of loans.
While slippages could remain elevated in the near term, healthy provision coverage ratio of ~70%, coupled with additional provision buffer of 2% (including standard provisions) is likely to protect Axis Bank's balance sheet against any potential stress.
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