Axis Bank net up 25%

Private sector lender Axis Bank on Saturday reported 25 per cent growth in net profit to Rs 920 crore for the quarter ended September 30, as compared to Rs 735 crore in the same period last year. Higher interest income from advances, rising fee income and better interest margin aided the bank's earnings growth during the quarter.

Net interest income, or the difference between interest earned and the interest expense, was Rs 2,007 crore during the three-month period, up 24 per cent from a year ago. Fee income stood at Rs 1,121 crore, up 32 per cent year on year.

Net interest margin expanded 10 basis points year on year and 50 basis points sequentially to 3.78 per cent. Higher yields on advances and growth in low-cost current account savings account (CASA) deposits improved the bank's margin.

“We don't think we can sustain this high level of margin going forward. It will moderate. For the year as a whole, we expect our margin to remain in the band of 3.25-3.50 per cent," Somnath Sengupta, executive director and chief financial officer of the bank, said in his post-earnings comments.

Net advances grew 27 per cent from a year ago to Rs 140,089 crore. Retail loans were at Rs 29,328 crore, up 40 per cent from a year ago. During the quarter, Axis Bank restructured Rs 311 crore. The total restructured assets were at Rs 2,410 crore as of September-end.

The bank added Rs 496 crore gross non-performing loans in July-September that resulted in higher provisions during the quarter. Gross bad loan ratio improved a tad from a year ago, but deteriorated sequentially to 1.08 per cent. Net bad loan ratio was also marginally higher quarter-on-quarter, and unchanged from a year earlier at 0.34 per cent.

Sengupta said the overall quality of the bank's loan portfolio continues to stay healthy and the growth in the bank's advances is likely to outpace the system credit growth this year.

Total deposits grew 24 per cent year-on-year to Rs 194,455 crore. Share of CASA improved to 42 per cent, driven by 24 per cent growth in savings deposits and 29 per cent rise in current account deposits. Axis Bank closed second quarter with a capital adequacy ratio of 11.35 per cent, without recognising the profits of first half of this financial year. Tier I capital adequacy ratio was at 8.48 per cent.

“We are not in immediate need of raising funds. We will evaluate the market and decide on the fund-raising programme in 2012," Sengupta said.