Motilal Oswal - Axis Bank Limited (AXISBANK) MOSL: AXIS BANK (Neutral)-NIMs surprises positively-Pool of stress loans remain unchanged

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Motilal Oswal

Alpesh Mehta

MOSL: AXIS BANK (Neutral)-NIMs surprises positively-Pool of stress loans remain unchanged

â€‹Axis Bank: NIMs surprises positively; Pool of stress loans remain unchanged

(AXSB IN, Mkt Cap USD18.3b, CMP INR517, TP INR525, 1% Upside, Neutral)

Axis Bankâ€™s (AXSB) PAT of INR12.25b beat our estimate of INR8.3b by 47%. Key positives are a) Core NIMs improved 10bp QoQ to 3.83% b) Strong loan growth of 7% QoQ c) Share of Retail and SME loans increased to 58.2% vs 55.5% a quarter ago and d) Average daily CASA growth stood at 26% YoY with SA growth at 29% YoY; Average CASA ratio stood at 43%
Total pool of gross stress loans was largely unchanged at INR412b (10.2% of customer assets). Net stress loans proportion stood at INR283b vs INR279b a quarter ago.
Slippages of INR48b were in line with those in the prior quarter (slippage ratio of 5.68% annualized). Around 74% of slippages (INR35.7b) were from the watchlist (70% in 3QFY17). However, this included one cement account of INR16.6b that slipped into NPL as well as got recovered/upgraded, both, during the quarter. Excluding this, slippage ratio would be 3.72% annualized.
AXSB also sold loans worth INR23.54b gross (INR18.2b net) to ARCs against net sale consideration of INR16.9b comprising INR2.7b in cash and INR14.2b in SRs.
FY17 was a tough year for AXSB with the significant balance sheet clean up. We expect this to continue in FY18 as well. RoE have declined from 17% in FY16 to 7% in FY17.

27/04/2017 18 EN

Underlying

Axis Bank Limited

Axis Bank is a consumer and corporate bank engaged in operations in India. Co. maintains activities in both retail and corporate banking. Co. is also active as a mutual fund in the Indian capital market. Co., through its servicing and distribution network provides a complete range of services to its investors. As of March 31, 2011, Co. operated 1,390 branches and extension counters, as well as a network of approximately 6,270 ATMs. Co. also has branches in Singapore, Hong Kong, Shanghai, the UAE, and Sri Lanka. Co. provides services in consumer and corporate banking, NRIs, Retail loans, treasury services, Capital market services and Financial Advisory services.

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INE238A01034 National Stock Exchange of India India

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Alpesh Mehta

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MOSL: AXIS BANK (Neutral)-NIMs surprises positively-Pool of stress loans remain unchanged

Int'l Macro Vision: Sector Synopsis

MOSL : AXIS BANK: Exemplary performance; margins take a giant leap

AXIS BANK with less fundamental stars is reduced to Neutral

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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