Axis Bank Q1 Results Review - Downgrade To Hold On Margin Pressures, Asset Quality Deterioration: Systematix

Systematix Research Report

Axis Bank Ltd. reported Q1 FY25 PAT of Rs 60 billion (-15% QoQ, +4% YoY) which was a mixed bag of results. While on the one hand, margins remained stable margins vs expectation of decline due to credit-to-deposit ratio pressures, on the other hand, asset quality deteriorated leading to higher credit costs due to higher retail slippages.

Other key highlights were:

1. Gross Advances growth of 1.6% QoQ, 14% YoY was corporate loan growth of 5% QoQ while retail and SME growth was flat QoQ.

2. Despite regulatory pressure to reduce CDR, deposits declined by -0.6% QoQ, +12.8% YoY mainly due to 3% qoq decline in CASA on seasonal outflow of CA deposits.

3. On calculated basis, NIM remained flat qoq as higher funding costs were offset by higher leverage and higher investment yields.

4. Other income declined by -14.5% QoQ (+4% YoY) due to weak fee income growth and lower trading income (due to higher base).

5. Opex/assets declined to 2.48% (versus 2.59%) mainly due to lower other overheads.

6. Gross /net non-performing asset at 1.5% / 0.3% increased by +11 bps / +3 bps QoQ and reported net credit costs increased to 0.97% versus 0.32% due to higher slippages mainly in the retail book.

7. Overall CAR / CET-1 stood at 16.65% / 14.06% with net CET-1 accretion of 32bps.

8. The bank delivered RoA/ RoE of 1.65% / 16.26%.

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