Axis Bank Q1 Preview: PAT may surge 45% YoY; Citi integration impact in focus

economictimes.indiatimes.com:

For the June quarter, the bank is expected to report a 45.4% year-on-year (YoY) growth in net profit to Rs 5,999 crore, according to the average of estimates given by 14 brokerages. Net interest income — the difference between interest earned and interest expended — is expected to increase 28% YoY to Rs 11,981.4 crore. The private sector lender is scheduled to release its earnings on Wednesday.

On a sequential basis, analysts expect net interest margin to dip, but it should be lesser than most other banks.Here is a summary of the analysts expectations from the lender:PhillipCapitalLoan book, including Citibank Consumer portfolio likely to grow 2.2% QoQ. Employee cost will have a full wage impact of Citi employee post acquisition. The bank will bear operating expenses of Rs 20 billion over 18 months.Prabhudas LilladherLoan growth might come in at 1.5%.

Decline in NIM to be lower at 3 bps QoQ to 3.99%, compared to 8 bps for banks as a whole, as the preceding quarter had seen Citi integration impact which had depressed NIM. Bank is relatively better placed on core PPoP as it is expected to be flat QoQ. Provisions are expected to normalise, with credit costs at 47 bps from 14 bps last quarter.Nuvama Institutional Equities Expect NII to grow 2% QoQ.

Ex-Citi portfolio, NII will decline 1.5% QoQ. Total NIM will decline by 12-14 bps QoQ. Expect flat deposit growth and 2% QoQ loan growth.

Operating expenses will be materially higher as Citi’s normalized run rate of opex is high and Citi-related one-offs will also hit opex this time. In addition, Axis Bank’s standalone opex will also likely rise QoQ because of a low base in H2FY23. Credit cost will also be materially higher QoQ on a very low base in Q4FY23.Kotak Institutional