Tag: Axis Bank shares

Profit may jump 80%, NIM likely stable at 3.5%, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: Axis Bank is likely to report up to 80 per cent surge in September quarter profit on a late single-to-double-digit growth in net interest income (NII).

Analysts have estimated net interest margin (NIM) to fall in the 3.4-3.5 range. All eyes are on slippages, restructuring and accounts rated BB or below.

ICICIdirect said retail-oriented banks such as Axis should see meaningful reduction in stress accrued in the last quarter. The recent management commentary has also indicated that. It said credit cost should decline as a result of better show on the asset-quality front, while anticipating the bank profit at Rs 2,997 crore, up 78 per cent YoY. “NII is expected to grow 10 per cent to Rs 8,047 crore, driven by 11 bps expansion in NIM. Loan growth is expected to come in at 11 per cent YoY, led by traction in the retail segment. Within the retail book, growth should be driven by home loans. Deposits growth is expected at 17 per cent YoY with sequential 30 bps rise in CASA ratio,” it said.

Nirmal Bang Institutional Equities said the brokerage would log a 79.7 per cent YoY rise in net profit at Rs 3,023.60 crore. NII would grow 8.3 per cent YoY to Rs 793.11 crore but NIM would fall 27 basis points YoY to 3.4 per cent, it said. Credit cost was estimated to fall 100 basis points to 1.3 per cent.

The private lender has reported a 12 per cent rise in loans and advances at Rs 6,22,352 crore and a 15 per cent surge in deposits at Rs 7,30,772 crore.

Motilal Oswal Securities said the net profit would rise 64.2 per cent to Rs 2,760 crore and NII would go up 8.9 per cent to Rs 7,980 crore. NIM would remain stable at 3.5 per cent. On asset quality, gross NPA was seen at 4 per cent, compared with 3.9 per cent in June quarter and 4.2 per cent in the year-ago quarter. Axis Bank’s net NPA was seen at 1.2 per cent, the same as the June quarter, but higher than 1.1 per cent in the year-ago quarter.



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Axis Bank to now raise up to $1 billion via overseas AT1 issue, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: Axis Bank joins its bigger peer HDFC Bank in selling Additional Tier 1 (AT1) bonds overseas, seeking to garner up to $1 billion in ESG-compliant instruments that should help the Mumbai-based private sector lender reduce its financing costs.

The ‘ESG’ (Environment Social Green) tag should lower the coupon in this round of offering by about 15 basis points, compared with the usual AT1 sales by similarly rated entities, four people familiar with the matter told ET. ESG funds are deployed in green and sustainable projects.

The bank has appointed about 10 investment bankers, including HSBC, Citi, MUFG, JP Morgan, Bank of America, Standard Chartered and Societe Generale.

Axis Bank did not reply to ET’s query. Investment banks couldn’t immediately be reached for comments.

Axis Bank is seeking to raise between $600 million and $1 billion depending on investor demand and pricing.

The initial price guidance could be in the range of 4-4.20 per cent, which would have been higher without the ESG tag, sources said. The ultimate pricing could be lower than the broad initial guidance.

The issue is expected to be launched in a week or two from Gujarat GIFT City depending on the outcome of the Jackson Hole policy meeting in the US, sources said.

“If Jackson Hole does not spring any negative surprise, roadshows are expected to begin from next week,” one of the persons cited above told ET.

The US Federal Reserve will hold its annual economic symposium in Jackson Hole, Wyoming, this Friday on August 27.

Earlier this month, HDFC Bank raised $1 billion amid overwhelming investor response.

Due to high demand, the pricing of those bonds was tightened by 43 basis points from the initial guidance to 3.70 per cent.

Axis Bank will have to offer more than this as the lender may be rated at least one notch lower than the HDFC Bank’s grade. Axis AT1 is expected to be graded as B+ or B, dealers said. The rating isn’t finalized yet.

Global rating company Moody’s rated them as Ba3 (or BB- in simple rating terminology), three notches below the deposit ratings.

A single notch by way of a lower rating can trigger a price differential of 50 basis points for a similar instrument, dealers said.

“The proposed ESG compliant papers will help cut the additional funding cost while creating space for expanding loans for sustainable projects,” said a senior executive involved in the deal.

AT-1 bonds are billed as quasi-equity securities that bear a higher risk of capital losses. Those are generally rated three-to-four notches lower than an issuer’s corporate credit rating.

Axis Bank’s overall capital adequacy ratio (CAR) was at 19.01 per cent in the June quarter with the CET1 (Common Equity) ratio at 15.2 per cent, much above the threshold limit.

Those gauges were at 17.47 per cent and 13.50 per cent, respectively, in the corresponding period a year ago.

The principal and any accrued interest would be written down, partially or in full, if Axis Bank’s CET1 ratio slips to 6.125 per cent later this year.



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Net profit rises 94% YoY, misses estimate; NII rises 11%, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: Axis Bank today reported a 94 per cent year-on-year rise in net profit to Rs. 2,160 crore for the quarter ended June, which was above analysts’ estimate.

The lender reported a 11 per cent on-year growth in net interest income to Rs. 7,760 crore in the reported quarter, which was also below Street’s estimate.

The lender saw a marked deterioration in its asset quality in the quarter likely due to the second wave of COVID-19 pandemic. The gross non-performing assets ratio stood at 3.85 per cent in the June quarter as against 3.7 per cent in the previous quarter.

Similarly, the net NPA ratio rose to 1.2 per cent in the quarter from 1.05 per cent in the previous quarter. The lender’s gross slippages in the quarter jumped 23 per cent sequentially to Rs. 6,518 crore and was nearly three times from the year-ago quarter.

As on June 30, the bank’s provision coverage, as a proportion of gross NPAs stood at 70 per cent, as compared to 75 per cent in the year-ago quarter and 72 per cent in the previous quarter.



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Axis Bank CEO, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: Large banks with strong balance sheet would continue to grow faster than their peers in an environment impacted by the pandemic, and sustained fiscal and monetary support by the government and the RBI would help economic recovery by the second half of this fiscal, Axis Bank‘s top official said.

The impact of the second wave of COVID-19 continues, Axis Bank Managing Director and CEO Amitabh Chaudhry said.

“I…hope that the acceleration in vaccination drives and continued fiscal and monetary measures by the government and the (banking) regulator would help the economy to recover from this pandemic by H2 of fiscal 2021-22,” Chaudhry said in the bank’s annual report for 2020-21.

Axis Bank will further strengthen its core, he said adding that the building blocks are firmly in place with granularity built across businesses, improving operational performance, strong capital and balance sheet position to counter any unforeseen risks arising out of second COVID-19 wave.

He said the medium-term growth drivers are firmly in place on the back of several initiatives taken by the government to boost manufacturing and small industries, and the recent shift in global manufacturing supply chain dynamics towards India.

“In such an environment, large banks with healthy operational performance, strong balance sheet and capital position, superior risk management, and operational capabilities would continue to grow faster than the overall sector,” Chaudhry said in his message to shareholders in the annual report.

During 2020-21, the bank’s focus was on building granularity across businesses coupled with strong focus on execution that helped it deliver strong growth across focused segments, he said.

The bank’s CASA (current account savings account) deposits grew 20 per cent, with the share of CASA increasing by 3.72 percentage points to 45 per cent in overall deposits. The retail savings accounts grew 19 per cent, while the current accounts rose 26 per cent.

“Our corporate loan book, including TLTRO, grew 16 per cent, with significantly higher growth across our focussed segments like mid-corporates and MNC. Retail disbursements touched all-time highs during the fourth quarter (January-March 2021),” he said.

TLTRO is targeted long-term repo operations.

Axis Bank reported a 305 per cent growth in its net profit at Rs 6,588 crore during 2020-21.

“Our domestic subsidiaries delivered 75 per cent yearly growth in net profits. Our focus still continues to be further scaling up the subsidiaries so that they gain higher market share in their respective businesses,” said the official.



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FPI holding in Axis Bank hit record high in December quarter, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: Foreign portfolio investors’ stake in Axis Bank hit an all-time high of 51.02 per cent in the December quarter, according to shareholding data released on Tuesday.

FPI holding in the private lender stood at 49.24 per cent in the September quarter, and had last hit a high of 50.75 per cent in the quarter ended September 2016.

As per the data, Axis Bank had 991 FPIs as of December 31, including Europacific Growth Fund, which owned a 1.9 per cent stake in the bank, Government of Singapore (1.06 per cent), Fidelity Investment Trust (Fidelity Series Emerging, 1.12 per cent), Oakmark International Fund (1.70 per cent), Dodge and Cox International Stock Fund (2.78 per cent), Vanguard Total International Stock Index Fund (1.10 per cent), Government Pension Fund Global ( 1.21 per cent) and BNP Paribas Arbitrage (1.16 per cent).

On Tuesday, shares of Axis Bank were trading 0.4 per cent higher at Rs 669.85 on BSE.

The scrip has rallied 135 per cent over its 52-week low of Rs 285.

Emkay Global said in its results preview that Axis Bank’s growth remains moderate, but an already high provisioning buffer should lead to reasonable profitability in the third quarter.

Slippages could remain elevated including proforma for Q2, it said, suggesting that one should watch out for corporate stress.

The bank is seen reporting a 7.1 per cent rise in net profit to Rs 18,82 crore, compared with Rs 1,757 crore in the year-ago period. Net interest income (NII) is seen growing 16.5 per cent YoY to Rs 7,515 crore from Rs 6,453 crore in the corresponding quarter last year. Net interest margin is seen flat at 3.6 per cent.

YES Securities said it expects the bank’s provisioning to be lower in Q3 than Q2, given the substantial buffer held by the bank. It expects growth on the back of retail and SME segments.

Motilal Oswal expects credit cost to stay elevated for the lender. Restructuring, and the BB and below pool will remain under watch, it said.

The bank will announce its third quarter results on January 27.



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