Rerating potential in Axis Bank stock

The April-June quarter (Q1) of the current financial year (FY25) may be soft for banks with loan growth moderation, net interest margin (NIM) pressures, and higher staff and credit costs inching up, according to analysts.

- DEVANGSHU DATTA

Credit growth could ease due to the lagged impact of the Reserve Bank of India (RBI) tightening and deposit growth has weakened, and the current account and savings account (CASA) ratio has declined 10-370 basis points (bps) quarteron-quarter (Q-o-Q) for many banks. As banks have raised deposit rates in the face of tight credit-deposit ratios, there is likely to be net interest margin (NIM) contraction also. The RBI crackdown on cards may also hurt fee incomes. While asset quality remains stable, there is a seasonal impact in terms of higher activity in MFI (microfinance) and Agri segments where higher slippages have been seen historically.