Q4FY23 Preview: Axis Bank: NII seen at Rs 12,118 crore, Loss After Tax at Rs 5,652 crore

25 Apr 2023 , 12:04 PM

Result date: 27^th April, 2023

Recommendation: Buy

Target price: Rs 1,090

(Source: IIFL Research)

Axis Bank completed merger with Citi Bank’s consumer business on March 1, 2023. This will impact the former’s performance during Q4. Axis Bank could witness continued traction in its loan book as well as deposits. If we were to include Citi merger effect, Axis Bank’s loan book could grow ~15% over the year-ago quarter while deposits could increase 11.2%. 

However, Axis Bank is likely to post losses at the operating and net profit level. This is because the goodwill it pays on acquisition of Citi Bank (Rs 116 billion) will be routed through its Profit and Loss account. Excluding this, the bank’s core pre-provisioning operating profit could grow at a healthy pace of 30-32% over the year ago quarter.

The Bank’s credit costs as well as slippages are likely to remain curtailed during the quarter. Though Net Interest Margin could remain healthy, analysts expect this metric to peak during the quarter.

Overall, the Bank is expected to post Net Loss After Tax.

Adjusting for one offs, the bank’s profitability is likely to remain stable.

Important management insights to watch out for:

• Moderation in cost ratios
• Growth outlook across segments 

Rs Crore	March 2023 estimates	YoY change	QoQ change
Net Interest Income (NII)	12,118	37.4%	5.8%
Operating Loss	(2,518)	NM	NM
Loss After Tax	(5,652)	NM	NM

Source: Brokerage estimates

NM: Not Matchable