Axis Bank Q4 net profit rises 22% to Rs 1,555 cr

The private lender's profit after tax for FY13 also up by 22% to Rs 5,179 cr

Axis Bank, India’s third largest private sector lender, today said its net profit for the quarter ended March 2013 increased 22 per cent from a year ago, to Rs 1,555 crore. The bank attributed the growth to higher interest income, growth in non-interest income, better margin and lower-than-expected rise in operating expenses.

The private lender’s profit after tax for FY13 also grew by 22 per cent to Rs 5,179 crore.

“In a challenging environment, we have finished the year well. Our balance sheet has grown 19 per cent, savings deposits and retail loans have increased, and operating expenses have been kept under control,” said Somnath Sengupta, executive director of Axis Bank, in his post-earnings comments.

Net interest income, or the difference between interest income and interest expense, was Rs 2,665 crore during the quarter, up 24 per cent from a year ago. Net interest margin rose 15 basis points (bps) from a year ago, and 13 bps sequentially to 3.70 per cent.

According to Sengupta, net interest margin would stay in the range of 3.25-3.50 per cent in the coming quarters.

Other income increased by 26 per cent, year-on-year (y-o-y), driven by higher fee income and growth in trading income. While rise in operating expenses was capped at 10 per cent, Sengupta expects it to increase by 15-18 per cent, going forward.

The bank’s asset quality remained stable with gross non-performing asset ratio rising 12 bps from a year ago to 1.06 per cent. Net bad loan ratio also swelled by 7 bps to 0.32 per cent. The provision coverage ratio was 79 per cent at the end of March 2013.

Axis Bank has created a contingent provision of Rs 375 crore to protect itself against sharp deterioration in asset quality.

However, Sengupta insisted the move was part of the bank’s prudent practice, and no significant stress was witnessed on the loan portfolio so far.

The bank restructured Rs 791 crore loans during the quarter. The lender’s restructured loan portfolio was Rs 4,368 crore or 1.94 per cent of gross customer assets at the end of the last financial year.

Advances rose 16 per cent, y-o-y, to Rs 196,966 crore, driven by 44 per cent growth in retail loans. The share of retail loans improved to 27 per cent from 22 per cent a year ago.

Deposits increased by 15 per cent to Rs 252,614 crore. The share of Casa (current account, savings account) deposits was 44 per cent of total deposits.

The bank closed FY13 with a capital adequacy ratio of 17 per cent.

On Tuesday, Axis Bank’s shares ended at Rs 1,451.80 on the National Stock Exchange, up 0.7 per cent from the previous close.

‘No evidence of money laundering’

Axis Bank today said its internal probe has not found any evidence to suggest its branches violated anti-money laundering rules. The bank has started an internal audit of its 12 branches and appointed KPMG to conduct an independent investigation.

“So far, there is no evidence of money laundering,” said Somnath Sengupta, executive director of Axis Bank. He clarified the bank was yet to complete its investigations and would look to strengthen its internal controls and processes, should it find any weaknesses.

The bank has removed 20 employees from key roles and relocated them to the lender’s administrative office. These employees were captured on video tape offering money laundering as a product to undercover journalists of online magazine Cobrapost.