Axis Bank Q4 Results Review - An All-Round Beat To Expectations: Systematix

Systematix Research Report

Axis Bank Ltd. reported Q4 FY24 profit after tax of Rs 71.3 billion (+17% QoQ, -224% YoY) which was an all-round beat to estimates led by better-than-expected performance on margins and other income. Management also clarified that recent board approval sought for raising capital is a routine process, done at the start of the year, and BAU net accretion of CET-1 has been 44bps in FY24 which is sufficient to fund growth plans.

Other key highlights were:

1. Advances growth of 3.5% QoQ, 14% YoY was led by 5- 7% QoQ growth in high yielding retail and SME while corporate advances declined by -3% QoQ. In the short term, credit growth will be constrained by deposit growth while in the medium term, management aims for 300-400 bps higher than industry growth,

2. Given elevated credit-deposit ratio of 90.3% and regulatory push to lower CD ratios, deposit mobilisation was strong at +6.3% QoQ, +13 YoY and was led by current account and savings account growth of 8.5% QoQ,

3. NIM at 4.1% (+5 bps QoQ) surprised positively vs expectation of 7-8 bps QoQ decline. This was led by yield (% IEA) increase of +11 bps QoQ partly offset by funding cost increase of +8 bps QoQ,

4. Another quarter of strong growth in other income (+22% QoQ, +38% YoY) on the back of mark to market gains and treasury gains in debt capital markets,

5. Opex/assets ratio remained stable QoQ at 2.6% with the bank to continue to invest in technology and growth on the back of benign credit costs,

6. Asset quality continued to improve with gross non-performing asset / net non-performing asset at 1.4% / 0.3% declining -15 bps / -5 bps QoQ,

7. Further, the bank also has 41 bps additional cushion from Rs 50 billion of Covid provisions which will be utilized for ECL transition.

8. Reported FY24 return on asset at 1.83% and return on equity at 18.86%.

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