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View Promises →Axis Bank Ltd — Q3 FY24
Axis Bank reported a steady Q3 FY24 with PAT of INR 6,071 crore, up 4% QoQ, driven by robust loan growth (23% YoY gross of IBPC) and fee income (29% YoY).
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Axis Bank reported a steady Q3 FY24 with PAT of INR 6,071 crore, up 4% QoQ, driven by robust loan growth (23% YoY gross of IBPC) and fee income (29% YoY). NIM declined 10bps QoQ to 4.01% due to rising deposit costs, but 9M NIM improved 13bps YoY to 4.08%. Asset quality improved with GNPA at 1.58% (down 80bps YoY) and net credit cost at 0.28%. Management flagged tight liquidity as a constraint on deposit growth, expecting system credit growth to converge to ~13%. They maintained medium-term guidance of 4-6pp faster loan growth than industry. Key risk: sustained deposit cost pressure could compress NIMs further if loan growth outpaces deposit mobilization.
एक्सिस बैंक ने तीसरी तिमाही में 6,071 करोड़ रुपये का शुद्ध लाभ कमाया, जो पिछली तिमाही से 4% ज़्यादा है। इसकी वजह कर्ज बढ़ना (23%) और फीस आय (29%) रही। ब्याज दरों में गिरावट (4.01%) हुई क्योंकि जमा पर ब्याज बढ़ा, लेकिन 9 महीने में यह 4.08% रहा। खराब कर्ज घटकर 1.58% रह गया, जो पिछले साल से 80% कम है। बैंक ने कहा कि बाजार में पैसे की कमी है, जिससे जमा बढ़ाना मुश्किल होगा। उनका अनुमान है कि कर्ज वृद्धि 13% रहेगी। आगे सावधानी: अगर कर्ज जमा से ज़्यादा बढ़ा, तो ब्याज दरों पर दबाव बढ़ सकता है।
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Deposit growth constraint may cap loan growth
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Read Transcript →Quarter Snapshot
Net Interest Margin (NIM)
4.01%
-10bps QoQ
NIM declined sequentially due to rising cost of funds, but 9M FY24 NIM improved 13bps YoY to 4.08%.
Gross NPA Ratio
1.58%
-80bps YoY
Asset quality improved significantly, with GNPA declining 80bps year-on-year to 1.58%.
CASA Ratio
42%
-196bps YoY
CASA ratio declined YoY due to tight liquidity, but remains among the highest in private sector banks.
Retail Disbursements Growth
47% YoY
+47% YoY
Retail disbursements grew 47% YoY, driven by festive demand and strong growth across home loans, personal loans, and agri.
What Changed vs Last Quarter
NEW
System credit growth to converge to ~13%
Management expects system credit growth to moderate towards deposit growth of around 13% due to tight liquidity.
NEW
Citi data migration and system integration by H1 FY25
The bank expects to complete data migration and system integration of the acquired Citibank business by end of first half of FY25.
NEW
No equity capital raise planned
Management reiterated that the bank does not intend to raise equity capital, citing organic CET1 accretion of 39bps in 9M FY24.
UPDATED
Medium-term loan growth 400-600bps above industry
Axis Bank maintains its medium-term guidance of growing loans 4-6 percentage points faster than the industry, though not on a quarter-to-quarter basis.
DROPPED
500 branch additions in FY24
The bank plans to add 500 branches in FY24, with 207 added in Q2 and 110 new centers.
DROPPED
Cost-to-assets target of ~2.1% by FY25
Management targets cost-to-assets ratio of around 2.1% by FY25, including Citi business, down from 2.41% in Q2 FY24.
DROPPED
Open by Axis Bank to contribute 3-4x by FY27
Digital banking platform Open currently ~5% of bank's business; management intends to increase contribution 3-4 times by fiscal 2027.
NEW RISK
Bulk deposit reliance may increase funding costs
Analyst noted that 60% of incremental deposits came from non-retail term deposits, which are more fickle and could distort cost of funds.
NEW RISK
Credit costs expected to normalize upward
Management acknowledged that recoveries from written-off accounts will reduce and credit costs will move up from current low levels.
NEW RISK
Potential second-order asset quality impact from tight liquidity
Prolonged tight liquidity could lead to asset quality stress, though management sees no signs yet and is monitoring closely.
RISK GONE
Operating expense pressure from Citi integration and investments
OpEx grew 34% YoY, with Citi integration costs and technology investments driving growth. Cost ratios expected to remain sticky until integration completes.
RISK GONE
Regulatory caution on unsecured lending
RBI has expressed caution on personal loan growth. Axis Bank's PL book grew 25% YoY, but management notes stress in sub-INR 50k segment (which they avoid).
RISK GONE
Net credit cost gap to shrink due to lower recoveries
Management expects recoveries and upgrades to decline, narrowing the gap between gross and net credit costs, potentially increasing net credit costs.
Fast read
Guidance and risk preview
Management expects system credit growth to moderate towards deposit growth of around 13% due to tight liquidity.
Tight liquidity and rising deposit costs could limit the bank's ability to grow loans at the desired pace, potentially compressing NIMs.
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