Axis Bank in red ahead of Q4 results on expected net loss due to Citi merger

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Axis Bank shares It traded down 0.6 percent on Thursday, ahead of fourth-quarter and fiscal year 23 results due to be released after market hours on Thursday. The private sector lender is expected to post a net loss for the fourth quarter due to one-time merger costs yet Acquisition of Consumer Banking business of Citibank India from March 2023..

“This quarter is not representative of core business because it includes the consolidation of Citi’s business into the portfolio. The bank will report a loss to reduce the goodwill of this acquisition,” Kotak Institutional Equities said in a note.

Analysts pegged the bank’s loan growth at 14-16 percent year-on-year led by retail and SME loans and deposit growth of 11-12 percent, while margins are expected to remain flat.

“except Acquisition of Citi PortfolioEmkay Global Financial said Access Bank’s growth is relatively slow, which should affect margins.

Net Interest Income (NII) is expected to increase by 33-38% YoY and 3-8% QoQ on the back of rapid conversion.

Slippages are expected to be controlled at around Rs 4,000 crore or 2 per cent loan, which is mostly led by small ticket loans. As a result, credit costs are seen muted at 79 basis points while cost of funds is expected to rise.

Also read: Axis Bank enters into a joint lending agreement with Autotrac Finance through Yubi

Even as asset quality ratios improve with the help of strong recoveries and modernizations, the bank is likely to make higher provisions during the quarter for merger-related expenses.

management guidance on Citi wallet integrationAnalysts said growth prospects, moderation in cost ratios, deposit attraction and progress in NIMs will be the key items to watch for this quarter.