Axis Bank’s profit up 83% at ₹790 crore in September quarter
Bank’s performance was boosted by higher net interest income and lower provisions
Mumbai:Net profit at Axis Bank Ltd rose 82.6% year-on-year (y-o-y) to ₹789.6 crore in the September quarter because of higher net interest income and lower provisions, the private sector lender reported on Friday.
Its profit was higher than the ₹758.9 crore estimated by a Bloomberg poll of 22 analysts. Net interest income (NII), the difference between interest earned and interest expended, increased 15.25% y-o-y to ₹5,232 crore.
Net interest margin (NIM), a key measure of profitability, stood at 3.59%, down 12 basis points (bps) y-o-y and 8bps sequentially.
Axis Bank’s other income, which includes core fee income, rose 3.5% to ₹2,678.38 crore in the three months to September 2018.
Axis Bank chief financial officer Jairam Sridharan said that Q1 was “the bottom” as far as NIMs are concerned.
“You might recall me saying last quarter that we have now had about 2.5 years of consistent NIM compression and now we feel like we have hit the bottom. My guess is that you will continue to see some strength in the NIM metric, either stability or further strengthening from these levels,” said Sridharan.
The bank’s gross non-performing assets (NPAs) ratio—bad loans as a percentage of gross advances—stood at 5.96%, up 6bps y-o-y but down 56bps sequentially.
The bank is seeing an improvement in the overall asset quality environment and all key metrics, such as new NPA formation, recoveries, credit costs and NPA ratios, continue to see strong improvement, said Shikha Sharma, the managing director and chief executive officer of the bank.
“So it would be prudent not to declare victory and take our eye off the ball on asset quality. That said, it is clear that new NPA formation has noticeably slowed,” Sharma said.
The lender is witnessing much more benign slippage levels than seen in the last three years and that special mention 2 (SMA-2) levels are at historic lows, she said.
Provisions during the quarter decreased 6.78% y-o-y to ₹2,927.3 crore.
In the June quarter, the bank had set aside ₹3,337.7 crore as provisions. Post-provisions, the net NPA ratio was at 2.54%, against 3.09% in the June quarter and 3.12% in the year-ago quarter.
The bank saw slippages of ₹2,777 crore in the quarter, down 69% y-o-y and down 36% sequentially.
Corporate slippages stood at ₹1,090 crore and the bank said that 88% of this originated from previously-disclosed accounts rated BB and below.
The bank’s BB and below book stood at ₹8,860 crore, or 1.7% of its gross customer assets, and was down to less than one-fourth of the 7.3% peak seen earlier.
Axis Bank’s total advances grew 11% y-o-y to ₹4.56 trillion as of 30 September. While domestic loans grew 15% y-o-y, the overseas book shrank by 12% y-o-y. Its retail loans grew 20% y-o-y to ₹2.21 trillion and accounted for 49% of net advances.
It saw a corporate credit growth of 0.6% and said that working capital loans grew 21% y-o-y.
On Friday, shares of the bank gained 1.26% to close at ₹609.95 on the BSE.
Editor's Picks »
- Why Tata Motors’ Project Charge at JLR is failing to recharge its shares
- Outlook on global profit growth worst since 2008 financial crisis
- Q3 results: ICICI Securities loses its retail broking crown
- High drug approvals to keep up pricing pressure for pharma firms
- Roads sector: Toll collections set to surge, but risks loom for developers