business
HDFC Bank and Axis Bank Shares Fall Nearly 5 Percent as Net Interest Margins Weaken but Loan Momentum Improves
Shares of India's two largest private-sector banks declined sharply Monday after their net interest margins contracted. HDFC Bank and Axis Bank each dropped close to 5 percent amid earnings pressures noted by analysts.
Jul 20, 2:08 AM·1m read1 source
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Cnbc reported that shares of HDFC Bank and Axis Bank fell nearly 5 percent on Monday after both lenders posted weaker net interest margins. HDFC Bank's margin contracted 13 basis points sequentially to 3.4 percent from 3.53 percent in the prior quarter. Axis Bank's margin compressed 16 basis points from a quarter earlier to 3.46 percent in the April-June period.
Citigroup said in a Sunday report that NIM compression together with softer fees added to earnings headwinds and that margins would remain a key monitorable. The brokerage also observed that loan momentum at the Mumbai-based HDFC Bank had improved, driven mainly by commercial and corporate demand, while retail traction stayed underwhelming.
Shares of HDFC Bank have been under pressure since March, when part-time chairman Atanu Chakraborty resigned and flagged governance and ethical concerns.
In June the bank said an independent legal review found no evidence to substantiate those concerns. Motilal Oswal said in a Monday report that the sharp compression at Axis Bank stemmed mostly from the impact of loan repricing. The brokerage cut its earnings estimates for Axis Bank by 2 percent for both the current financial year ending March 2027 and the next year.
