Hardening bond yields to weigh on bank profits in September quarter
Axis Bank is in focus in a banking & credit development.
· Economic Times Markets, ET Stocks
For the September quarter, Nifty 50 banks are forecasted to see an 11.5% rise in net interest income, yet net profits are expected to grow more slowly at around 10%. This growth is supported by robust capital inflows from the RBI's FCNR-B deposit swap scheme, bolstering deposit growth. Leading banks like Axis Bank and Kotak Mahindra Bank are likely to show substantial profit growth this quarter.
The analysis
Axis Bank reported movement of 10% and 11.5%. Those are the figures as filed — what moves the price is how they sit against what the market already expected, not their absolute size.
Against that, the stock is -1.0% on the day at ₹1,255.90, and has returned -4.7% over three months. It sits 10% below its 52-week high. The banks sector has moved -2.4% over the same period, so Axis Bank is running 2.3 points behind its peers.
This is an Asset quality / margins event. For lenders the headline profit is the least informative line. Slippages, credit cost and margin direction determine whether the quarter is repeatable. On the day the stock is -1.0%, so a modest reaction.
Why it matters
- Credit growth and asset quality are the pulse of the financial sector, which is the largest weight in Indian indices.
- With RBI involved, this carries a regulatory dimension that can outlast the immediate market reaction.
Market context
- The company directly in focus is AXISBANK.
- Sector exposure: Banks, Capital Goods & Engineering, Capital Markets.
In this story
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