Axis Bank – Q2FY24 Result Update

Sector Outlook – Positive

Axis Bank did well in the second quarter of FY24, making more money from interest, managing its expenses, and setting aside some money for potential issues. Their profits were higher than expected, which is a good sign for them.

In the second quarter, their Net Interest Income, which is the money they make from lending, was about Rs 12,315 crores. This showed a 3.0% increase from the previous quarter and an 18.9% increase from the same time last year. Pre-provision operating profit (PPOP), which was Rs 8,632 crores. This was a 2.1% decrease from the previous quarter but an 11.9% increase from last year.

The bank set aside Rs 815 crores for provisions in Q2FY24, which was less than the Rs 1,035 crores in the first quarter of the fiscal year but more than the Rs 550 crores in the same period last year. This increase was mainly because they didn’t need to use as much money for COVID-related issues in the second quarter. The bank made a profit of Rs 5,864 crores in the second quarter, which was a 1.2% increase from the previous quarter and a 10.0% increase from last year. 

Key Concall Highlights

• Axis Bank has been doing well lately, managing to make good returns on its investments while taking on less risk. In the second quarter of the fiscal year 2023-24, the bank saw a record high in retail loans due to balanced growth across its different loan products.
• The bank expects its loans and deposits to grow by around 13% for the whole fiscal year, excluding any impact from mergers. They’ve also managed to earn more money from the interest on their assets, which has helped them make more profit.
• One reason for their increased profits is that they have less money tied up in low-yield investments compared to the previous year. The bank’s management has plans to keep improving their profits by changing the types of loans they offer and charging higher interest rates.
• The bank recently acquired a retail business from Citi, which is expected to bring in more profit once it’s fully integrated. However, it may take some time for this integration to be completed.
• The bank is also in a good position when it comes to setting aside money for potential losses. They have a strong provision coverage ratio, which is better than most other banks.
• Overall, Axis Bank is making smart moves to improve its profits and manage its risks effectively. They are focused on growing their business in a sustainable way.

Valuation and Outlook

Axis Bank had a really good quarter in the second quarter of the fiscal year 2023-24. They performed well because their credit card business grew a lot, and they gave out more loans in the small and mid-sized segments, which earned them more money. This helped them make slightly more money from their investments when many other banks were struggling. There was a small dip in their profit this quarter, but it was mostly because they had some extra costs from merging with CITI Bank. However, this merger will eventually bring them more customers who can help them make more money in the long run.

The bank did a good job of managing their loans and didn’t have too many bad ones, which is a sign that they are careful about who they lend money to. This shows that they are likely to have good quality loans in the future. In the coming months, with interest rates expected to remain high, Axis Bank is likely to do well. They are also focusing on providing better services to their customers, which should help them make more money. Overall, Axis Bank looks like it will continue to perform well in the medium term, with a positive outlook and good financial metrics in place. Their balanced approach of having physical branches and using digital technology gives them an advantage over other banks.