Axis Bank, the third largest private sector lender in the country, today said its net profit for the quarter ended December 31, 2012 expanded 22% from a year earlier to Rs 1,347 crore as it grew its retail assets and earned higher fee income.
Net interest income, or the difference between interest income and interest expense, rose 16.6% year-on-year to Rs 2,495 crore. Net interest margin expanded 11 basis points sequentially to 3.57% during the third quarter. However, the bank's margin narrowed by 18 basis points year-on-year due to increase in cost of funds.
"We had good growth across all our businesses in a very challenging year. Going ahead we expect our margin to remain stable," Somnath Sengupta, executive director of the bank, said in his post earnings comments.
Other income of the bank grew 13% from a year ago aided by growth in retail and SME (small and medium enterprise) banking fees.
The bank kept its credit quality stable. Gross non-performing asset ratio remain unchanged at 1.10% while net bad loan ratio improved by 6 basis points to 0.33% at the end of December, 2012.
Provisions narrowed to Rs 387 crore on account of write-back in depreciation provisions. Axis Bank closed the quarter with a provision coverage ratio of 81% including prudential write-offs.
In October-December, the private lender restructured Rs 368 crore loans. The bank's restructured loan portfolio was Rs 4,257 crore or 2.06% of gross customer assets at the end of the quarter.
Sengupta does not expect any sharp rise in the lender's restructured loan portfolio in the current quarter. He declined to comment on specific queries relating to bank's loans to Deccan Chronicles, which became non-performing in the previous quarter.
Advances were up 21% year-on-year at Rs 179,504 crore. The credit growth was driven by the rise in retail advances, which expanded by 45% year-on-year. Share of retail advances was 27% of total loans. Sengupta said the bank will make efforts to grow its consumer loans further.
Deposits increased by 17% to Rs 244,501 crore. Share of low-cost current account savings account (CASA) deposits was 40% at the end of December, 2012. The bank added 46 branches during the quarter expanding its network to 1,787 branches.
The private lender closed the quarter with a capital adequacy ratio of 13.73%.
"Net interest income was largely in line with expectations. However, with lower than expected provisions, the profit after tax was better than our and street estimates," broking firm Emkay Global Financial Services said in a note to clients.
Axis Bank shares today ended at Rs 1,428 on the National Stock Exchange, up 3% from previous close.