MUMBAI (Reuters) - India's Axis Bank expects growth in its bad loans to slow in this financial year, it said on Wednesday as it reported quarterly profit up by a fifth.
The nation's third-biggest private sector lender by assets posted a better than expected 18.4 percent rise in net profit to 21.81 billion rupees ($344.6 million) in its financial fourth quarter to March 31, beating a consensus analysts' forecast of 21.4 billion rupees.
Bad loans as a percentage of total lending remained little changed from the third quarter at 1.34 percent, but Chief Financial Officer Sanjeev Gupta said the bank's guidance is for the level of stressed assets -- bad and restructured loans -- to grow at a slower rate than last year.
The level of such debt increased by 55.77 billion rupees in the past financial year, the bank said, which was less than its estimate of about 65 billion rupees.
Two years of weak economic growth have led to a surge in bad loans for Indian banks. Bad and restructured loans together accounted for about 10.7 percent of outstanding loans as of last September, central bank data shows.
The economy, however, is forecast to grow at a faster pace this year, prompting more optimistic forecasts from the country's lenders.
Separately, Axis Bank said it would seek shareholder approval to raise the amount of foreign investment allowed in the bank to 74 percent from 62 percent after the board approved the proposal.
The bank's board also approved a plan to issue up to 142 million depositary receipts, which would facilitate issue of depositary receipts outside India against underlying existing equity shares and increase foreign shareholders' participation. Five equity shares will convert to one depositary receipt.
Shares in Axis Bank closed 3.2 percent higher in a Mumbai market that fell 0.55 percent. The stock has gained nearly 10 percent so far this year, outperforming bigger rivals, having gained 93 percent in 2014.
($1 = 63.2900 Indian rupees)
(Reporting by Devidutta Tripathy and Aman Shah; Editing by David Goodman)
