Axis Bank net up 18% on healthy loan growth

The bank's net interest income rose 20% y-o-y to Rs 3,799 crore during the reporting period

Axis Bank on Wednesday reported a 18 per cent growth in net profit at Rs 2,181 crore for the quarter ended March 2015 on the back of healthy loan growth.

The third largest private sector lender saw 22 per cent growth in its loans, aided by a 22 per cent growth in its retail loan book. “Among retail, mortgage loans and unsecured loans grew better than the others. Our credit card business growth is one of the strongest in the industry,” said Sanjeev Kumar Gupta, executive director and chief financial officer of the bank in the post earnings conference call. The banks’ net profit was in line with a Bloomberg estimate.

Net interest income rose 20 per cent year-on-year to Rs 3,799 crore, although net interest margin (NIM) came down by nine basis points (bps) to 3.81 per cent.

“Margins have come down due to the reduction in base rate by 10 bps in the previous quarter, the full impact of which was felt in the January-March quarter,” said Gupta. The bank expects an NIM of 3.5 per cent.

On the liabilities side, deposits grew 15 per cent, on the back of similar growth in low-cost savings and current account deposits (Casa). While savings account deposits grew 17 per cent, current account deposits swelled 11 per cent. The share of Casa in total deposits remained unchanged at 45 per cent, compared to last year, one of the highest in the sector.

Other income, comprising fee, trading profit and miscellaneous income, for the fourth quarter of FY15 grew 21 per cent to Rs 2,687 crore on the back of Rs 275 crore of trading profit due to favourable movement of bond yields during the January-March 2015 period.
 
Asset quality remained stable on a sequential basis, although there was a marginal decline on a yearly basis. As of end-March, gross non-performing assets (NPAs) and net NPAs stood at 1.34 per cent and 0.44 per cent, respectively, with a high provision coverage ratio of 78 per cent. Provision for bad loans was at Rs 371 crore, compared to Rs 168 crore during the same period last year. The lender also provided Rs 134 crore for un-hedged foreign exchange exposure of its clients.

While debt cast worth Rs 1,540 crore was taken in the quarter, the pipeline is seen at Rs 500 crore. Slippages from restructured assets were Rs 150 crore.