According to the brokerage, “business loan disbursements increased 24% quarter-on-quarter, stable year-on-year. The mid-size business segment grew 32% yoy / 10% qoq. The quarter-on-quarter decline in business loans was attributed to corporate deleveraging, some prepayments and businesses. access to sources of funds other than bank loans. The investment cycle has reached its low point and a recovery could be postponed for 6 to 12 months. Festive demand has been strong, so working capital usage (which has been good so far) should improve in the future. Retail disbursements increased 54% year-on-year and 54% quarter-on-quarter. “
IIFL Securities said in its latest report that “the bank’s mortgage disbursements were up 86% year-on-year and 54% quarter-on-quarter. SBB disbursements increased 103% year-on-year / 72% quarter-on-quarter. late. Disbursements in the personal loan segment increased 72% year-on-year and 21% quarter-on-quarter. Credit card spending has grown 54% year-on-year and 34% quarter-on-quarter, and tends to exceed pre-COVID levels. The bank intends to develop unsecured retail loans more quickly over the next few years. “
The brokerage says that “management hopes to achieve structural improvement in the NIM in the future, due to i) an improvement in the mix of loans versus investments on the asset side, ii) on the one hand. higher low cost deposits and iii) a reduction in RIDF bonds (which have a negative spread) as incremental allocations stopped because the bank is PSL compliant. The bank had an excess SLR of around 856 billion The restructured portfolio of Axis Bank amounted to 44.6 billion rupees, or 0.72% of loans. AXSB has a PCR of around 24% on the restructured portfolio, including 100% PCR for unsecured personal loans. Restructuring is not expected to exceed current levels (in% loan terms) in the future. Of the total restructured loans, approximately 93% are secured. LTV in the restructured retail portfolio s’ was ~ 40-70%. Restructuring by segm ent: i) corporate at 0.68%, ii) retail at 0.80%; PME at 0.02%. The non-fund exposure linked to this book is Rs10.02bn.
Buy Axis Bank suggests IIFL securities
IIFL Securities noted in its research report that “a strong franchise of liability with a very granular share of retail deposits (~ 83%) is the main strength of the bank. The bank is effectively capitalizing its large customer base of around 27 million We expect AXSB’s operating expenses to remain high in the near term, like other large private banks, to invest in technology and franchise to seize emerging growth opportunities. Asset quality is stabilizing and the falling cost of credit should provide support for earnings. “
The brokerage further pointed out that “the bank is sitting with a strong CET1 of around 15.8% which is expected to provide growth without dilution in the years to come. Asset quality surprised positively with a sharp drop in prices. Net slippages (7.1 billion rupees) and limited restructuring (0.72%) .Operating expenses increased sharply (13.4% failure) due to strong growth of 24% in QoQ of other operating expenses. The bank continues to maintain COVID provisions on the balance sheet and with the improvement, the cost of credit of the economic outlook may surprise positively. Thus, we recommend a PURCHASE to stock with a long term target of Rs . 970. “
IIFL Securities stated in its research report that “Digital procurement has grown significantly over the past two years. %, respectively, in October 2021; these products grew 1.5-2.3x year-on-year. Various initiatives on payment platforms led to a + 1% market share by volume on UPI / NEFT / RTGS, to 16/9/12%, respectively. For products like FASTag, the Bank strives to increase use cases, like fuel payments, parking payments, etc.
According to the brokerage firm, “the strategic priorities are: a) the omnichannel customer experience through products and processes; b) capturing the customer ecosystem opportunity; and c) efficiency and scalability. The bank has a clear focus on the entire business ecosystem, aiming to improve risk-calibrated core operating profits through products (payments, loans, commitments, investments), the value chain (employees, dealers / distributors, sellers, investors, etc.) and the minimization of operating costs (digital, direct supply, etc.). working with Fintech partners such as Saverisk, ePayLater, Porfios and Refyne, to provide tailor-made ecosystem solutions. A focused enterprise ecosystem approach led to a 2.3x / 1.3x growth in liabilities / operating profit and assets, in fiscal year 19. ”
“Digitization and improved compliance offer a strong opportunity to increase penetration in the SME sector. With the system of aggregation of accounts, this process is likely to accelerate. The Bank provides a complete platform for small businesses, via: a) the InstaBIZ application (probably moving to an open architecture soon); b) modular platforms, with specific solutions; and c) the supply of BaaS, with links to Fintechs. InstaBIZ has +1 million active clients with + 20% penetration in cross-sell products, ”added IIFR Securities.
Buy ICICI Bank, Says IIFL Securities
The brokerage said that “the ICICI Bank analyst meeting was intended to provide a deep insight into a) the customer journey, from acquisition through various channels to deepening relationships to solutions. customized and technology platforms leading to better risk management; b) partnering with fintechs to expand the pie and deliver solutions to customer needs; c) single point focus on core operating profit calibrated according to risk in all divisions. In wholesale and SME banking services, the Bank sees emerging growth opportunities, with a revival and formalization of expected CAPEX / increased compliance in the economy. Analyst meeting strengthens our confidence in ICICIBC, to compete with fintech players with the best technological platforms. Its journey to capture profitable market shares in fields targeted continues to gain momentum. Reiterate BUY, with Sep-2023 SOTP of Rs 949 / share. “
The above stocks have been selected from the IIFL Securities brokerage report. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author and the brokerage are not responsible for any losses caused as a result of decisions based on the article.