Deposit growth constraint may cap loan growth
Tight liquidity and rising deposit costs could limit the bank's ability to grow loans at the desired pace, potentially compressing NIMs.
AXISBANK / Q3-FY24 / risks
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Material risks this quarter
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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.
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.
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.