Healthy growth in fee income helped Axis Bank log a 33 per cent rise in fourth-quarter net profit at Rs 1,020 crore, compared to Rs 765 crore a year ago.
Net interest income, or the difference between interest income and interest expense, was at Rs 1,701 crore, up 17 per cent from a year ago.
“It has been a good year and quarter for us. Current account savings account deposits have grown well, fee income has been strong, and asset quality has improved. We have also significantly improved our provision coverage ratio. The financial metrics of the bank look good,” Executive Director and Chief Financial Officer Somnath Sengupta said in his post-earnings comments.
Fee income surged 58 per cent from a year ago to Rs 1,231 crore during the three months to March. Fee income from large and mid-corporate credit was up 68 per cent. Treasury income grew 79 per cent and fee income from retail business was up 45 per cent year-on-year.
“In the fourth quarter of last year (2009-10), the bank had changed its accounting policy to recognise fee earned on bank guarantees on a pro-rata basis over the period of the guarantee, against the earlier policy of recognising the same upfront,” Axis Bank said in a statement.
“Adjusting for the change in accounting policy, fee income for this quarter would have reflected growth of 39 per cent on a year-on-year basis.”
Trading profit declined to Rs 58 crore from Rs 103 crore a year earlier due to hardening of bond yields.
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The country’s third-largest private lender, however, witnessed a contraction in net interest margin (NIM), as cost of deposits rose during the quarter. In January-March, the bank’s NIM was 3.44 per cent, down 37 basis points sequentially. In the fourth quarter of 2009-10, NIM was 4.09 per cent.
“It’s difficult to assess the outlook on NIM. It will depend on how we manage our low-cost deposits and whether we are able to pass on the excess cost to our customers. Over a period of time we will be comfortable, if our margin remains in the range of 3.25-3.50 per cent,” Sengupta said.
The cost of deposits of the bank was at 5.70 per cent, compared with 4.45 per cent in the corresponding period last year.
Advances were at Rs 1,42,408 crore as on March-end, up 36.5 per cent from a year ago, while deposits were at Rs 1,89,237 crore. The share of low-cost current account savings account deposit was 41 per cent of total deposits. In 2011-12, Axis Bank expects 25 per cent growth in both advances and deposits.
The bank also improved its asset quality, with gross non-performing asset ratio declining 12 basis points year-on-year to 1.01 per cent. Net bad loan ratio was at 0.26 per cent, down 10 basis points from a year ago.
In January-March, Axis Bank restructured loans worth Rs 108 crore. The total restructured assets were at Rs 1,930 crore as on March-end.
The private lender closed the financial year with a capital adequacy ratio of 12.65 per cent.