Axis Bank Slumps 6 per cent as Q3 Profits Miss Estimates, Economic Headwinds Weigh
Loan growth slows to 9 per cent YoY, with rising credit costs and slippages impacting investor sentiment
Axis Bank Ltd, India’s fourth-largest private bank by market capitalization, saw its shares decline by 6.11 per cent to Rs 974.6 on Friday, January 17, 2025. The drop followed a lukewarm Q3FY25 earnings report, which drew adverse investor reactions due to high credit costs and slow deposit growth compared to peers.
The bank reported a 3.83 per cent year-on-year (YoY) rise in net profit to Rs 6,304 crore, but sequentially, net profit declined by 9 per cent. Interest income rose 11 per cent YoY to Rs 30,954 crore, while interest expenses increased 12 per cent YoY to Rs 17,348 crore. Despite a 9 per cent growth in net interest income to Rs 13,606 crore, the net interest margin narrowed to 3.93 per cent, down from 4.01 per cent a year ago and 3.99 per cent in the previous quarter.
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Rising Credit Costs and Slippages
Asset quality showed slight deterioration, with gross non-performing assets (NPA) rising to 1.46 per cent at the end of December 2024, compared to 1.44 per cent in the prior quarter. Slippages increased, driven by stress in the agricultural and unsecured lending segments. Provisions and contingencies more than doubled YoY to Rs 2,156 crore, reflecting the bank’s tightening provisioning policies amid elevated bad loans in microfinance and unsecured portfolios.
Slower Growth and Muted Outlook
Axis Bank's loan book grew 9 per cent YoY in Q3FY25, slower than the 11 per cent growth in the previous quarter. Total deposits also rose by 9 per cent YoY, reflecting muted performance in a competitive banking environment.
The bank’s management highlighted macroeconomic challenges, including slow economic growth, which is dampening customer asset growth. The near-term outlook for growth and asset quality remains subdued due to prevailing economic stress.
As of now, Axis Bank’s market capitalization stands at Rs 3.05 lakh crore, with the stock trading at Rs 992 on January 17, 2024 at around 3.20 pm.
Disclaimer: This article is for informational purposes only and does not constitute investment advice.