1QFY2012 Result Review:: Axis Bank-- Angel Broking,

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1QFY2012 Result Review
Axis Bank
For 1QFY2012, Axis Bank reported strong performance with healthy 27.0% yoy growth in its
net profit at `942cr, in-line with our estimates of `943cr (which were ~5% higher than street’s
expectations). Healthy fee income growth and further improvement in slippage ratio were the
key highlights of the result.
Business growth momentum for the bank slowed during the usually lean quarter, with advances
declining by 7.4% qoq (up 21.4% yoy) and deposits coming off by 3.0% qoq (up 24.5% yoy).
With the widening interest rate differential in savings account and term deposit, the bank’s
CASA deposits growth moderated to 25.6% yoy (down 4.3% qoq) – leading to a decline in
CASA ratio to 40.5% from 41.1% in 4QFY2011. Reported NIM compressed by 16bp qoq to
3.3% compared to a 37bp qoq decline in 4QFY2011. The slower build-up in CASA deposits,
higher savings rate and drop in CD ratio added to the downward pressures on NIM. Asset
quality remained healthy with annualised slippage ratio declining further to 0.8% from 1.0% in
4QFY2011 and 1.6% in 1QFY2011. Gross and net NPA ratios were also stable sequentially
and the provision coverage ratio including technical write-offs was at comfortable 80.0%. The
bank added 21 branches during the quarter. Tier-I CAR including 1QFY2012 profit improved
to 9.8%.
The stock is currently trading at 2.1x FY2013E ABV. We maintain our Buy view on the stock with
a target price of `1,648.