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Axis Q2 earnings: One-off DTA adjustment, NPA rise to hit profit

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NEW DELHI: Axis Bank is expected to report a steep drop in net profit for September quarter, hurt by one-off DTA (deferred tax assets) adjustment. Investors would be keenly eyeing the stressed asset pool besides margin outlook, post linking of fresh retail loans to external benchmarks. Brokerage Edelweiss Securities estimates net profit to come in at Rs 162.40 crore against Rs 789.60 reported for the same quarter last year.

It expects net interest income to grow 14.4 per cent YoY to Rs 5,986.30 crore from Rs 5,232.10 crore in the year-ago quarter. “After posting qualitatively soft earnings for June quarter with disappointment on asset quality and in core revenue momentum, we believe all eyes will be on the behaviour of its stressed pool.

In the aforementioned quarter, with the identification of further eight stressed accounts and downgrades to watchlist, overall stressed pool stood at Rs 17,500 crore, about 2 per cent of total exposure.

This implies a cautious outlook for slippages in the near term,” the brokerage said. “However, given that it conservatively enhanced the contingency buffer in June quarter, provisioning could be lower QoQ,” it said.

HDFC Securities estimated profit at Rs 650 crore, down 17.8 per cent YoY.

This brokerage projects NII growth at 12.7 per cent. “Led by a 14 per cent loan growth and stable NIMs, core earnings is estimated to grow 13 per cent.

Pre-Provision operating profit (PPOP) may grow 33 per cent after factoring in a mere 5 per cent rise in opex and a healthy other income growth.

With the rise in loan loss provisions and DTA impact, we expect net earnings of Rs 650 crore, down 53 per cent QoQ,” the brokerage said.

Brokerage Motilal Oswal Securities expects margins to remain stable sequentially at 3.4 per cent, but sees slippages at an elevated level of 3.1 per cent as the macro-environment deteriorates and the bank disclosed its exposure to a few stressed groups.




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