EUR 120.00 For Business Accounts Only

Morning India (29/April/20): 1. Axis Bank (a. 4QFY20 Result: Prudential provisioning drives losses; b. Inks deal to form JV with MAX Life); 2. EcoScope (Why 10-year yield could fall to 5.5% over next few months

MOrning India (29/April/20):

Today’s top research idea
Axis Bank: Prudential provisioning drives losses
** AXSB reported net loss of INR13.9b, affected by higher provisions (INR77.3b) as the bank created additional provisions of INR30b toward the COVID-19 impact. NII increased 19% YoY to INR68.1b, led by healthy loan growth, while margins declined 2bp QoQ to 3.55%.

** Loan growth stood at ~15% YoY, driven by 24% YoY growth in retail loans and an 11% YoY increase in corporate loans. Deposits grew at ~17% YoY, led by a 27% YoY rise in retail TD.

** Fresh slippages moderated to INR39.2b, of which corporate slippages stood at INR18.4b. The GNPA/NNPA ratio narrowed 14bp/53bp as PCR improved 950bp QoQ to 69%.

** We expect loan growth to moderate on account of a weak environment weighed by the COVID-19 outbreak. On the other hand, the BB and below pool is likely to increase further, which, coupled with the high share of loans under moratorium, would drive elevated slippages over FY21E; estimated credit cost would remain elevated at 2.4% in FY21E. Maintain Buy

Piping hot news
Moody's slashes India growth forecast to 0.2% for 2020
Rating agency Moody’s Investors Service on Tuesday slashed its 2020 growth forecast for India to 0.2% from 2.5% earlier holding that the economic costs of coronavirus crisis amid the near shutdown of the global economy are accumulating rapidly. “There are significant downside risks to our forecasts in the event that the pandemic is not contained and lockdowns have to be reinstated. Even without longer-duration lockdowns, a self-perpetuating dynamic could take hold, resulting in large-scale destruction of businesses and entire sectors, as well as a structurally high unemployment rate, a permanent loss of human capital, and persistent malaise in consumption and investment," the rating agency said in its Global Macro Outlook update