Axis Bank's credit, NIM view tight

Axis Bank's December quarter (Q3FY24) results have more or less met analysts' expectations. But its A muted outlook on loan and deposit growth in tandem with rising costs pushed the stock down by around 3% on Wednesday.

Deposit growth has lagged loan growth. In Q3, loans and deposits grew by 22% and 18% year-on-year, respectively, and by 4% and 5% quarter-on-quarter. Notably, the bank's asset quality improved, with gross non-performing assets (NPAs) as a percentage of total loans showing a positive trend sequentially, dropping to 1.58% as at the end of December from 1.73%.

On the other hand, share of CASA deposits in total deposits fell to 42% in Q3 from 44% in Q2, indicating a drop in the quality of deposits. CASA refers to current account, savings account.

Overall, though, Axis Bank's net profit grew by 4% to 607 crore in Q3.

Despite decent growth, investors are concerned due to the bank's apprehensions about credit and deposit growth.

Anticipating a tight liquidity environment to continue until inflation cools to 4%, Axis Bank foresees a slowdown in credit growth and limitations on deposit expansion.