Axis Bank Q2 net profit rises 70% to Rs 5,329 crore; NII jumps 31%

Not looking to raise capital immediately for Citi deal: MD-CEO

Axis Bank on Thursday reported a 70 per cent year-on-year rise in standalone net profit for the July-September quarter at Rs 5,329.77 crore as a healthy increase in net interest income and margins boosted the private lender’s bottomline.

Sequentially, the bank’s net profit rose 29 per cent from Rs 4,125.26 crore in Q1.

In Q2, Axis Bank’s net interest income was at Rs 10,360.26 crore, up 31 per cent on-year and 10 per cent quarter-on-quarter. Net interest income refers to the difference between interest earned and interest expended. For the period under review, Axis Bank’s net interest margin was at 3.96 per cent, 57 bps higher on-year and 36 bps sequentially.

“We have been guiding the market stating that we would like to reach a margin of 3.8 per cent over the next couple of quarters… As you see our numbers, we have already crossed that number in a much shorter period in a significant manner,” Axis Bank MD-CEO Amitabh Chaudhry said in a post-earnings call.

“It gives us the cushion to continue to manage the NIMs as we move forward and ensure that we make it more sustainable as an enterprise rather than seeing volatility around it or it swinging back-and-forth too much,” he said.

“As far as the transmission is concerned, most of the transmission, which could be done as per our policies, has been passed on. We will obviously see re-pricing of deposits in the next couple of quarters. We would like to maintain the margins in the same zone,” Chaudhry said.

Chaudhry said Axis Bank hoped to conclude its deal with Citi by the last quarter of the current fiscal year, but there was a chance of the process spilling over into the April-June quarter, FY24.

In March, 2022, Axis Bank said it would purchase Citi’s retail business in a Rs 12,235-crore deal.

Axis Bank is not looking to raise any capital for the acquisition as profits generated are sufficient to fund growth in the first half of the current financial year, Chaudhry said.

“We are under no pressure to go to the market immediately. We will bide our time and do it at the right time, the right price so that our existing shareholders do not get diluted unnecessarily. Our CET is at 15.14 per cent, 177 bps will go because of Citi acquisition, but we are still comfortably over internal benchmarks,” he said.

The bank’s asset quality improved, with the gross NPA ratio falling to 2.5 per cent as on September 30 from 3.53 per cent a year ago and 2.76 per cent a quarter ago. The net NPA ratio was at 0.51 per cent versus 1.08 per cent a year ago and 0.64 per cent on June 30.