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Result and Price Analysis

Axis Bank reported a decent result with positive takeaways being 1) Accomplishing the aspirational ROE of more than 18% for 1QFY24, 2) Credit growth (22.4% YoY, 1.6% QoQ) stood strong. 2) NII growth stable at 27% YoY and 1.8% QoQ, on the back of 12bps reduction in NIMs to 4.1 (expected). 3) Disbursement in wholesale and SME loans up, 4) Strong contingent provision buffer (1.4% of gross loans), 5) NPA (GNPA/NNPA ratio 1.96%/0.41%) numbers stable sequentially despite higher slippages and steady recoveries. 6) restructuring (22bps of GCA) squeezed further and at manageable level with 22% coverage. However, negatives are 1) Sequential de-growth in PPOP because of higher opex (way above our estimates).

GNPA ratio declined; restructuring narrowed down further:

Axis Bank’s total slippages came higher at ?39.9bn v/s ?37.7bn in the previous quarter. The up-gradation & recovery stood steady at ?23bn v/s ?27bn in 4QFY23. The write-offs were ~?21.3bn. A stable asset quality show resulted in 2.4% sequential decline in GNPA amount. GNPA/NNPA/PCR stood at 1.96%/0.41%/93% against 2.02%/0.39%/94% in the previous quarter. GNPA ratio stable across segments. Retail GNPA at 1.4%, where SME and corporate GNPA ratio is at 3% and 1.1% respectively. The restructured pool reported lower meaningfully at ?19bn (22bps of GCA) largely from retail book, v/s ?21bn in the previous quarter.

Axis Bank carries a provision of ~22% on restructured loans, which is in excess of regulatory limits. Around 96% of retail restructured book is secured (with LTV of 40% - 70%) and 100% provision made on unsecured retail restructured book. BB & below rated pool stable at 0.39% of gross customer assets. Fund based BB & below outstanding up by 4.8% sequentially, Moreover, Non fund based outstanding in BB & below pool was stable. 100% of restructured corporate book classified as BB & Below. The provision expenses were sequentially higher at ?10.4bn (v/s ?3bn in the previous quarter).

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