Axis Bank Q3 Results Preview: Net profit may rise 6% YoY; NIM to remain stable; deposit, loan growth to be flat

Axis Bank Q3 Results Preview: Axis Bank is set to announce its earnings for the third quarter of FY25 tomorrow, January 16. The private sector lender is likely to witness a single-digit growth in its net profit and interest income along with a minor drop in net interest margins.

Axis Bank share price was trading more than 2% lower on Wednesday, a day ahead of its Q3 results announcement. The banking stock has fallen over 11% in one month and 22% in six months.

From net profit, net interest margin (NIM), to loan growth and asset quality, here’s what to expect from Axis Bank Q3 results:

Axis Bank Q3 Net Profit

Axis Bank is expected to report a net profit of ₹6,440 crore in the fiscal third quarter ending December 2024, registering a growth of 6.06% from ₹6,071.10 crore in the same quarter last year, according to a Livemint poll of five brokerages.

Pre-provision Operating Profit (PPoP) in Q3FY25 is expected to rise 20.31% to ₹10,997.82 crore from ₹9,141 crore, year-on-year (YoY).

Axis Bank Q3 NII

Axis Bank’s Net Interest Income (NII) during the quarter under review is estimated to increase 9.69% to ₹13,747 crore from ₹12,532.20 crore in the year-ago period. Net interest margin (NIM) of the bank in Q3FY25 is expected to decrease by 10 basis points (bps) YoY to 3.96% from 4.06% due to decline in yields, as per the average estimates.

On a sequential basis, NIM is expected to drop by 4 bps from 4% in the quarter ended September 2024.

Axis Bank Q3 Asset Quality

During the quarter ended December 2024, Axis Bank is expected to see a sequential drop in provisions as the bank has made contingency provision in Q2FY25.

On the asset quality front, the lender’s Gross Non-Performing Asset (GNPA) ratio is expected to rise 11 bps to 1.6% in the December quarter from 1.4% in the September quarter. Net NPA ratio is also estimated to increase to 0.4% from 0.3%, QoQ.

Axis Bank Q3 Deposits, Loan

Axis Bank’s deposit growth in the October-December 2024 quarter is expected to be 4.5% to ₹11.4 lakh crore from ₹10.9 lakh crore in the September quarter. The bank is expected to see loan growth of 4% to ₹10.4 lakh crore from ₹10 lakh crore, QoQ, according to brokerage firm Motilal Oswal Financial Services.

Analysts View

Analysts at Citi expect Axis Bank’s credit cost to be elevated in Q3 due to increased delinquencies in PL/CC, aggressive write-off policy, and management’s guidance of not utilising buffer provisions.

“Continuous deposit repricing and mix change in favor of secured assets could keep NIMs under pressure and we build in 5-7 bps of contraction QoQ. With LDRs at 92%, we expect loan growth to broadly follow deposit growth. Focused segments – SBB+SME+MC will continue to lead the overall growth. Absence of integration cost (post Sep’24) will provide immediate delta to opex and opex to assets is likely to be managed at 2.5%,” Citi said.

YES Securities estimates sequential loan growth to be in the 3.5% ballpark due to idiosyncratic growth trajectory.

“NII growth will be in-line with average loan growth as the rise in yield on advances to be in tandem with rise in cost of deposits. Consequently, NIM will be stable sequentially. Sequential fee income growth will broadly match loan growth. Opex growth would slightly lag business growth. Slippages would be marginally higher on a sequential basis,” YES Securities said.

At 3:05 PM, Axis Bank shares were trading 2.10% lower at ₹1,027.85 apiece on the BSE. 

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