Axis Bank
| Clarity on corporate book stress is a positive
Company Update BUY `675
Axis Bank’s move to provide clarity on the stress in its corporate book is a positive step in our opinion. The size of stressed corporates loans is `226bn (6% of customer assets), with 60% of these likely to flow into NPL category. While it has not resulted in material change in our estimates (cut by c.5% for FY17/18E), the move would definitely boost confidence. Though management has guided for credit cost of 125-150bps in FY17, Axis Bank’s strong operating profit levels (over 5% to loans) can easily absorb these shocks. During 4Q16, strong trends in retail business continued with retail loan and fee growth of 26% YoY and 15% YoY respectively. NIM expanded to 3.97% and the bank created contingent provisions of `3bn in 4Q. Axis Bank remains one of the best recovery plays.
JM Fin
| Clarity on corporate book stress is a positive
Company Update BUY `675
Axis Bank’s move to provide clarity on the stress in its corporate book is a positive step in our opinion. The size of stressed corporates loans is `226bn (6% of customer assets), with 60% of these likely to flow into NPL category. While it has not resulted in material change in our estimates (cut by c.5% for FY17/18E), the move would definitely boost confidence. Though management has guided for credit cost of 125-150bps in FY17, Axis Bank’s strong operating profit levels (over 5% to loans) can easily absorb these shocks. During 4Q16, strong trends in retail business continued with retail loan and fee growth of 26% YoY and 15% YoY respectively. NIM expanded to 3.97% and the bank created contingent provisions of `3bn in 4Q. Axis Bank remains one of the best recovery plays.
JM Fin
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