Today i.e. on October 26, the major lenders of the private sector Axis Bank The bank is expected to see strong growth in profits in the September 2021 quarter on account of reduction in provisioning and improvement in asset quality.
The bank’s net interest income and loan growth may be in double digits, but it will be important to keep an eye on slippages or fresh NPAs.
The stock showed strong action after its counterpart ICICI Bank posted decent results with a rise of 3.5 per cent on October 25. There has been a growth of 21.2 percent so far in this financial year and 13 percent since July. Now the results coming today will decide whether the stock will be able to carry forward the rally or not.
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Kotak Institutional Equities said that with a focus on retail, it is expected to see loan growth at the rate of 10 percent per annum. The net interest margin on a quarterly basis may remain unchanged, ie, 3.7 per cent. On the other hand, operating profit growth is expected to be 5 per cent year-on-year due to weak Treasury income and normal operating expenses. However, we see a 96 per cent year-on-year growth in profit and 10.5 per cent growth in net interest income for the September quarter.
On the other hand, ICICI Direct also expects 10 percent growth in NII and 11 percent year-on-year loan growth. This growth will be seen in the retail book due to home loans. With a 30 bps increase in the CASA ratio on a year-on-year basis, deposits are expected to grow by 17 per cent.
The brokerage said credit cost should come down on the back of better performance in asset quality, while the bank expects a 78 per cent year-on-year growth in profits.
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Kotak expects slippage of around Rs 4,000 crore (approximately 2.5 per cent of the debt) in this, with more slippage from the retail segment and lesser slippage from the corporate portfolio. Kotak said that due to the strong recovery/upgrade, we expect the non-performing loan ratio to decline.
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