Axis Bank, the country’s third-largest private-sector lender, reported a subdued year-on-year (Y-o-Y) increase in net profit of 4 per cent, reaching Rs 6,034 crore for the quarter ended December (Q3FY25), owing to a rise in loan-loss provisions on account of an uptick in fresh slippages and a muted increase in net interest income (NII) and other income.
NII grew 9 per cent Y-o-Y to Rs 13,606 crore on account of muted growth in advances. During the same period, other income grew 8 per cent Y-o-Y to Rs 5,972 crore.
The net interest margin, a measure of banks’ profitability, stood at 3.93 per cent, a drop of 6 basis points (bps) from the previous quarter, and 8 bps from the corresponding period a year ago.
The bank reported fresh slippages of Rs 5,432 crore, up 46 per cent Y-o-Y and 22.25 per cent sequentially.
Of this, Rs 4,923 crore is on the retail portfolio; Rs 215 crore in the SME (small and medium enterprise) business; and Rs 294 crore on the wholesale books.
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“A normalisation cycle is in progress as far as retail asset quality is concerned. Our recognition and provisioning policies are perhaps the most conservative among peer banks. We expect this will stabilise over the next few quarters,” said Amitabh Chaudhry, managing director and chief executive officer, during the media call.
Loan-loss provisions went up to Rs 2,185 crore in Q3 as against Rs 1,441 crore in Q2 and Rs 691 crore in Q3FY24.
Provisions and contingencies stood at Rs 2,156 crore in Q3 because other provisions reduced substantially, compared to Rs 2,204 crore in Q2 and Rs 1,028 crore in Q3FY24.
“Our provisions are largely towards the retail unsecured portfolio, which has slipped, given the current market environment. We have taken corrective action on a look-forward basis on that portfolio. We have previously indicated that across the industry, personal loans and the credit card as a portfolio have been seeing higher levels of risk than they historically ran. We continue to monitor these portfolios,” said Puneet Sharma, chief financial officer.
Gross non-performing assets (NPAs) stood at 1.46 per cent at the end of the December quarter and net NPAs were 0.35 per cent.
At the end of the September quarter, gross NPAs were 1.44 per cent and net NPAs 0.34 per cent.
The bank’s advances grew 9 per cent Y-o-Y and 1 per cent sequentially to Rs 10.14 trillion, driven by 11 per cent Y-o-Y growth in retail loans, which accounted for 60 per cent of the bank’s advances portfolio.
Under retail loans, home loans grew 3 per cent Y-o-Y, personal loans 17 per cent, credit card advances 8 per cent, small business banking 20 per cent, and the rural loan portfolio grew 17 per cent.
Additionally, the SME portfolio grew 15 per cent and corporate loan books 4 per cent, with domestic corporate books 3 per cent.
“In this quarter, we have been more careful about growth in some of the segments in which we see some stress and therefore we have calibrated growth in those segments. Because of this we have taken calls on which segments to push and which segments to go easy on. We are confident that on a yearly basis we will continue to see good growth in our advances,” said Subrat Mohanty, executive director, Axis Bank.
On the other hand, the bank’s deposits grew 9 per cent Y-o-Y, increasing in tandem with the loan portfolio. Of this, current account deposits grew 8 per cent and saving account deposits remained flat.
Term deposits grew 14 per cent. The share of CASA (current accounts savings accounts) deposits in the total stood at 39 per cent.