Axis Bank Q2 Review - Strong Quarter, Surprise On Net Interest Margin: Dolat Capital
Axis Bank's Q2 earnings exceeded estimates as net interest margin rose and credit costs fell amid flattish opex.
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Dolat Capital Report
Axis Bank Ltd.’s earnings exceeded estimates led by beat on net interest margin (up 36 basis points QoQ to 3.96%), low credit costs (~30 bps), and flattish opex QoQ, resulting in return on asset of 1.8% for the quarter and significantly bridging the return on asset gap versus large private peers.
NIM benefitted from re-pricing of external benchmark lending rate loans, 300 bps rise in credit-deposit ratio, and sequential moderation in lower yielding rural infrastructure development fund book.
Axis Bank's loan growth at 4% QoQ was broad based, with domestic corporate and small and medium enterprise leading growth at 6-7% QoQ. Asset quality concerns are largely behind with slippages at 1.9% and overall credit costs at 30 bps benefitting from healthy recoveries.
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