Axis Bank Q2 Results 2024: Shares Surge Over 4% After Earnings

Axis Bank Q2 Results 2024. Axis Bank reported its Q2 FY24 financial results, showing strong performance and a significant surge in profits. Key highlights include:

1. Net Interest Income (NII): The bank’s net interest income increased by about 10% year over year to ₹13,483 crore from ₹12,315 crore in the same quarter the previous year. However, NII showed just a slight gain from ₹13,447 crore in Q1 FY25 on a quarter-on-quarter (QoQ) basis, remaining constant.
2. Net Profit: From ₹5,863 crore in Q2 FY24 to ₹6,917 crore in Q2 FY25, Axis Bank’s net profit increased 18% year over year. Favorable tax adjustments, which led to lower tax payments for the quarter, were primarily responsible for this growth.
3. Asset Quality: A favourable trend in asset quality was indicated by the bank’s Gross Non-Performing Asset (GNPA), which decreased from 1.54% in Q1 FY25 and 1.74% in Q2 FY24 to 1.44% for Q2 FY25. At 0.34%, net NPA stayed constant.
4. Advances and Deposits: Advances at the bank increased by 11.4% to ₹9.99 lakh crore from ₹8.97 lakh crore in Q2 of FY24. Deposits increased 13% year over year to ₹10.86 lakh crore.
5. Operating Profit: Axis Bank’s operational profit increased 19% year over year to ₹20,819 crore in the first half of FY25 (H1 FY25), while core operating profit up 13% year over year to ₹19,238 crore.
6. Provisions: Total provisions for H1 FY25 amounted to ₹4,243 crore.
7. UPI Market Leadership: The bank maintained its leading position in UPI payments, capturing over 30% of the market share in September 2024.

Following these results, Axis Bank shares surged over 4% in post-earnings trading, reflecting investor confidence in its strong quarterly performance and improvements in asset quality.

Despite the positive Q2 FY24 financial results, Axis Bank’s stock performance ahead of the earnings announcement was muted. The stock closed 1.9% lower at ₹1,131 per share on the NSE, reflecting investor caution before the results were released. However, the strong post-earnings reaction, with shares surging over 4%, indicates renewed investor optimism based on the solid earnings growth, improved asset quality, and steady deposit and advances growth. Axis bank Q2 Results 2024.

Key Observations:

1. Growth in Deposits and CASA: With term deposits increasing 21% year over year, Axis Bank’s deposit profile remained strong. Savings account (SA) deposits increased by a moderate 1%, while current account (CA) deposits increased by 13%. The bank maintains one of the best CASA (Current Account and Savings Account) ratios in the business.
2. Slippages and Asset Quality: Gross slippages in Q2 FY25 were ₹4,443 crore, which was higher than ₹3,254 crore in Q2 FY24 but marginally less than ₹4,793 crore in the preceding quarter. The bank’s efficient handling of problematic loans is demonstrated by the decrease in GNPA to 1.44%, which improved the overall asset quality despite the greater slippages.
3. Loan Growth: Despite rising interest rates, the bank’s advances increased 11.4% year over year to ₹9.99 lakh crore, showing consistent credit growth. Although this growth is marginally less than the 14% saw in Q1 FY25, it nevertheless indicates a robust demand for credit in the corporate, retail, and SME sectors.
4. Operating Efficiency: Strong fee income growth (up 13%) and strict expense control were the main drivers of Axis Bank’s operating profit growth in H1 FY25, which increased 19% YoY. The bank’s capacity to produce steady profits from its core banking operations is demonstrated by the 13% growth in core operating profit.
5. Provisioning and Risk Management: For H1 FY25, the bank’s provisions stayed steady at ₹4,243 crore, showing sufficient protection against possible risks. This is consistent with its approach of keeping robust protections against credit risks, particularly in a difficult macroeconomic climate.
6. UPI Leadership: With more than 30% of the payer service provider market in September 2024, Axis Bank maintained its leading position in the UPI market. This demonstrates the bank’s expanding digital capabilities and collaborations with fintech companies to fortify its place in the ecosystem of digital payments. Axis bank Q2 Results 2024.

READ ALSO : Bank Of Maharashtra: Gross Advances Up 18.73% YOY, Deposits Surge 15.5%

Outlook:

Axis Bank‘s Q2 FY24 results reflect a strong financial position, supported by improvements in asset quality, steady loan and deposit growth, and leadership in digital payments. The favorable tax adjustments that boosted profits this quarter might not be a recurring factor, but the bank’s underlying performance, particularly in terms of core operating profit and asset quality, points to a solid foundation for sustained growth in the coming quarters. Axis bank Q2 Results 2024.

The market’s response, with a sharp increase in stock price after the earnings report, suggests that investors are optimistic about the bank’s prospects. However, the bank will need to continue focusing on managing its cost of funds, given the anticipated pressure on net interest margins (NIMs) due to rising interest rates. Axis bank Q2 Results 2024.

Overall, Axis Bank is well-positioned to maintain its growth trajectory, driven by a strong balance sheet, prudent risk management, and continued focus on digital transformation. Axis bank Q2 Results 2024.

Challenges and Opportunities Ahead:

While Axis Bank has posted a strong Q2 FY25 performance, there are certain challenges and opportunities that could shape its future growth:

1. Net Interest Margin (NIM) Pressure: One area where the bank may face pressure is its net interest margin (NIM), which has remained flat at 4.05% in Q1 FY25. As funding costs continue to rise due to higher interest rates, there is a possibility that NIMs may contract further. This could slightly dampen profitability in the coming quarters unless the bank finds ways to either reduce its cost of deposits or increase lending at higher rates. Axis bank Q2 Results 2024.
2. Loan Growth Amid Economic Conditions: While the bank’s loan book has grown by 11.4% YoY, a slowdown in economic conditions or higher borrowing costs could impact credit demand, particularly in the retail and SME segments. However, Axis Bank has demonstrated a strong capacity to manage its loan portfolio efficiently, balancing risk with growth. Continuing to focus on sectors with strong demand, such as home loans, auto loans, and SME lending, could help mitigate some of these challenges. Axis bank Q2 Results 2024.
3. Digital Banking and UPI Expansion: Axis Bank’s leadership in UPI payments, with over 30% market share as a payer service provider, is a notable achievement in India’s rapidly growing digital payments market. The bank’s collaboration with fintech companies and its robust digital infrastructure provide a solid platform to further enhance its presence in this space. As digital banking grows, Axis Bank can leverage its technology capabilities to offer more seamless and innovative services, catering to both retail and corporate customers. Axis bank Q2 Results 2024.
4. Improvement in Asset Quality: One of the most positive aspects of Axis Bank’s Q2 FY25 results is the improvement in asset quality. The reduction in GNPA to 1.44% and a stable net NPA at 0.34% indicate that the bank is successfully managing its bad loans and non-performing assets. This provides a strong foundation for future growth, as it frees up more capital that can be deployed towards expanding its loan book or improving returns to shareholders. Axis bank Q2 Results 2024.
5. Cost Management and Operational Efficiency: The bank has shown impressive cost discipline, as reflected in its operating profit growth of 19% YoY for H1 FY25. Axis Bank must continue to maintain tight control over costs while investing in technology, digital transformation, and customer acquisition strategies. This balance between cost efficiency and growth will be crucial as the competitive landscape in the Indian banking sector intensifies. Axis bank Q2 Results 2024.
6. Sustainability and ESG Initiatives: As investors increasingly prioritize sustainability and environmental, social, and governance (ESG) factors, Axis Bank’s focus on such initiatives could enhance its attractiveness. The bank can capitalize on this trend by expanding its green lending portfolio, reducing its carbon footprint, and promoting inclusive banking solutions for underserved segments of the population. Axis bank Q2 Results 2024.

Conclusion:

Axis Bank’s Q2 FY25 results highlight its ability to navigate a challenging economic environment while delivering steady growth and maintaining strong financial health. The significant improvement in asset quality, continued dominance in the digital payments space, and healthy loan and deposit growth underline the bank’s resilience and adaptability.

However, the bank must remain vigilant to potential headwinds, particularly around NIM compression and macroeconomic factors affecting credit demand. By focusing on operational efficiency, risk management, and innovation in digital banking, Axis Bank is well-positioned to continue delivering value to its shareholders and customers in the coming quarters.

As it stands, Axis Bank has laid a strong foundation for sustainable growth, and with the right strategies in place, it can maintain its leadership position in the Indian banking sector while capitalizing on emerging opportunities in the digital economy and financial inclusion. Axis bank Q2 Results 2024.

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