Axis Bank, India’s third largest private lender, said on Tuesday its net profit for the quarter ended December 31, 2012 expanded 22 per cent from a year earlier to Rs 1,347 crore as it grew its retail assets, earned higher fee income and made lower provisions.
Net interest income — the difference between interest income and interest expense — rose 16.6 per cent year-on-year (YoY) to Rs 2,495 crore. Net interest margin expanded 11 basis points (bps) sequentially to 3.57 per cent during the third quarter (October-December) of FY13. But, the bank’s margin narrowed by 18 bps YoY due to increase in cost of funds. In his post earnings comments, Executive Director Somnath Sengupta said, “We had good growth across all our businesses in a very challenging year. Going ahead, we expect our margin to remain stable.” Other income of the bank grew 13 per cent 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 remained unchanged at 1.10 per cent, while the net bad loan ratio improved by six bps to 0.33 per cent at the end of December 2012.
Provisions narrowed to Rs 387 crore on account of write-back in depreciation provisions. Axis closed the quarter with a provision coverage ratio of 81 per cent, including prudential write-offs.
In October-December, the private lender restructured Rs 368 crore worth of loans. The bank’s restructured loan portfolio was Rs 4,257 crore or 2.06 per cent of gross customer assets at the end of the quarter. Sengupta does not expect any sharp rise in the restructured loan portfolio in the current quarter. He declined to comment on specific queries relating to the bank’s loans to Deccan Chronicle, which became non-performing in the previous quarter.
Advances were up 21 per cent YoY at Rs 179,504 crore. Credit growth was driven by the rise in retail advances, which expanded 45 per cent YoY. The share of retail advances was 27 per cent of total loans. Sengupta said the bank would make efforts to grow its consumer loans further.
The bank’s deposits increased by 17 per cent to Rs 244,501 crore and the share of low-cost current account and savings account deposits was 40 per cent at the end of December 2012.
During the quarter, Axis Bank added 46 branches, expanding its network to 1,787 branches.
The private lender closed the quarter with a capital adequacy ratio of 13.73 per cent.
Saday Sinha, banking analyst with Kotak Securities, in a note to clients, said, “Axis Bank’s earnings came slightly ahead of our expectations — net interest income surprised positively on the back of better-than-expected net interest margin, while net profit growth was further aided by lower provisions during third quarter. Although business growth witnessed marginal moderation sequentially, it was better than the overall systemic growth. Asset quality also remained stable, while addition to restructured portfolio came more or less similar to previous quarter.”
Axis Bank’s shares on Tuesday ended at Rs 1,428 on the National Stock Exchange, up three per cent from the previous close.
