Mark your calendars for October 25, 2023, because that’s when Axis Bank will be revealing its financial performance for the second quarter of the fiscal year 2024, and it’s all happening on a Wednesday. Anticipation is building, and it’s expected that this private sector bank will show a healthy increase in its profits, thanks to a boost in the money it makes from interest on loans. But, like many others in the banking world, they might be feeling the squeeze on their profit margins.
The banking world, in general, seems to be in good shape, with loans growing at a steady 15% compared to the previous year, especially in unsecured loans and corporate lending. Deposits are also on the rise, increasing by 13% compared to last year. This is partly thanks to a move by the Reserve Bank of India to phase out the ₹2,000 notes, which has pushed people to deposit more money in the banks. Plus, banks have sweetened the deal with higher interest rates for term deposits, making it more appealing for customers. All this, along with the increase in CASA (Current Account and Savings Account) activity, should help banks manage their costs effectively.
In the quarter ending September 2023, Axis Bank is projected to experience a 12% year-on-year increase in its net profit, reaching ₹5,970 crore. This marks a noteworthy rise from ₹5,329.8 crore earned during the same period last year.
ICICI Bank’s second-quarter results are in, and they bring good news – their net profit has surged by 35.8% compared to the same period last year, reaching an impressive ₹10,261 crore. Even more promising, their net interest income (NII) has also seen a robust increase of 23.8% at ₹18,308 crore.
Looking ahead to the next quarter, ICICI Bank is expected to maintain its strong performance with NII likely to grow by 15% to ₹11,914 crore, compared to ₹10,360.3 crore in the previous year. Although the net interest margin (NIM) might dip slightly due to higher fund costs, the bank anticipates this decrease will be manageable.
The bank’s efforts to control margin contraction, combined with judicious provisioning, are set to bolster its profitability. Interestingly, there don’t appear to be any alarming signs of increased stress on their loans, which is a positive signal according to Emkay Global Financial Services.
In a similar vein, Axis Bank is also projected to post strong numbers for the July-September quarter, with a predicted 17.2% increase in Pre-Provision Operating Profit (PPoP) to ₹9,044.9 crore, compared to ₹7,716.2 crore in the same period last year.
