Axis Bank is anticipated to witness a slowdown in year-on-year net interest income (NII) growth during Q3FY24, but it is still expected to hover around 10 percent, driven by robust credit offtake. Analysts project that a margin contraction will likely limit net profit growth to mid-single digits. The bank is scheduled to disclose its fiscal third-quarter results on January 23, 2024.

According to the consensus estimate of five brokerages, Axis Bank is expected to announce NII for October-December at Rs 12,555 crore, reflecting a 9.5 percent increase compared to the previous year. Net profit is forecasted to reach Rs 6,114 crore in Q3FY24, reflecting a 4.4 percent YoY increase.

The lender's margins are expected to face pressure during the quarter due to higher borrowing costs. Analysts estimate a contraction of 16 basis points (bps) in Axis Bank's net interest margins (NIMs), dropping to 4.1 percent in Q3FY24 from 4.26 percent in Q3FY23.

In terms of asset quality, analysts at Motilal Oswal predict an improvement in the gross non-performing assets (NPAs) ratio to 1.7 percent in Q3FY24 from 2.4 percent in the corresponding period of the previous year. Net NPAs are also anticipated to improve to 0.4 percent in Q3FY24 from 0.5 percent in Q3FY23.

Apart from this, deposits are expected to grow to Rs 10.1 lakh crore in the December-ended quarter, marking an 18 percent YoY increase. Concurrently, loans are projected to experience a 22 percent YoY growth, reaching Rs 9.3 lakh crore, primarily driven by the retail segment.

The Q3 results of Axis Bank follow a varied performance by private sector lenders. While India's largest private lender, HDFC Bank, disappointed investors with sluggish deposit growth and a decline in earnings per share (EPS), the second-largest private lender, ICICI Bank, exceeded Street estimates with a record high profit growth.

At the stock exchange, Axis Bank's shares outperformed, surging over 6 percent in the October-December period, surpassing the Bank Nifty index's 4 percent rise. On a yearly basis, the stock of the private sector lender witnessed a significant uptrend, soaring over 20 percent compared to an 8 percent rise in the benchmark Sensex.