PL First Cut - Axis Bank Q1FY24

PL First Cut – Axis Bank Q1FY24 – *Gaurav Jani – Research Analyst, Prabhudas Lilladher Pvt Ltd*

Axis Bank Q1FY24 – Margins higher to PLe by 17bps; miss on core PAT by 11% due to opex drag; asset quality in-line

--NII was ahead at Rs119.6bn (PLe Rs116bn) as NIM was better while loan growth was in-line

--NIM (calc.) was a beat at 4.17% (PLe 4.0%) mainly led by better yields

--Loan growth came in as expected at 22.4% YoY and 1.6% QoQ while lower deposit growth at 17.2% YoY (PLe 20%) also contributed to better NIM

--Loan growth was led by SME (8% QoQ), while retail and corporate clocked a growth of 2% QoQ.

--Deposits accretion was softer at (-0.6% QoQ) as CASA de-grew by 4% QoQ while TD grew by 2.5% QoQ. Retail TD saw higher growth of 4.5% QoQ/11.6% YoY.

--Other income was higher at Rs50.9bn (PLe Rs48bn) due to higher treasury gains; while fees was a tad lower

--Opex was 14% higher to PLe at Rs82.3bn due to both higher staff cost and other opex.

--Led by miss on opex, PPoP was lower at Rs88.1bn (PLe Rs92.2bn) while core PPoP was 9% lower to PLe

--Asset quality was largely in-line; GNPA/NNPA was 2.0%/0.42% while PCR was steady QoQ at 80%.

--Gross slippages were lower at Rs39.9bn (PLe Rs38.1bn), while recoveries at Rs23bn (PLe Rs22bn). Write-offs were higher at Rs21bn (Rs15bn)

--Provisions too were in-line at Rs10.3bn (PLe Rs10.0bn)

-- PAT was a miss at Rs58bn (PLe Rs61.7bn) while core PAT at Rs54.1bn was 11% below PLe

--The stock trades at P/ABV of 1.8x on FY25E ABV