Axis Bank net profit up 38%

Owing to strong growth in interest income, the country’s third-largest private sector lender, Axis Bank, reported a net profit of Rs 735.14 crore for the second quarter of this financial year, a 38.28 per cent increase from Rs 531.64 crore a year ago.

Net interest income (NII), the difference between the interest earned and interest expended, rose 41 per cent to Rs 1,615 crore as against Rs 1,150 crore in the September 2009 quarter.

Fee income registered growth of 18 per cent to Rs 849 crore as against Rs 719 crore a year ago. The growth was primarily due to an increase in income from credit to large and middle level companies, which grew by 54 per cent.

However, in keeping with the industry trend, income from proprietary trades fell 52 per cent to Rs 108 crore, as against Rs 224 crore in the September 2009 quarter, pushing down the share of trading profits in operating revenue from 10 per cent to four per cent.

STURDY GROWTH
	Q2 FY’10	Q2 FY’11	Chg (%)
Total income	3925.94	4657.49	18.63
Total Expenditure	2620.19	3171.14	21.03
Net interest income	1149.68	1615.00	40.47
Net profit	531.64	735.14	38.28
Gross NPA ratio (%)	1.21	1.12	—
Net NPA ratio (%)	0.45	0.34	—
Capital Adequacy ratio (%)	16.47	13.68	—
All figures in Rs  Cr

Net interest margin (NIM) was at 3.68 per cent, better than the year-ago quarter (3.52 per cent), but flat compared to the first quarter (3.71 per cent).

According to Somnath Sengupta, executive director and chief financial officer, NIMs were expected to remain in the 3.25-3.5 per cent range over the next few quarters. “Since we are in a rising interest rate environment, the cost of funds will continue to be under pressure,” he said.

Axis Bank’s advances grew to Rs 81,044 crore, a rise of 36 per cent over the year-ago quarter, but less than two per cent over the previous quarter.

“Loan growth in the second quarter was muted. However, credit growth is likely to pick up in the coming quarters and we expect growth of 1.3 times the industry average,” Sengupta said.

During the quarter, the bank added Rs 446 crore to its gross non performing assets (NPAs). Recoveries and upgradations of Rs 130 crore and write-offs amounting to Rs 294 crore resulted in Rs 1,362 crore gross NPAs on September 30 – higher by Rs 230 crore compared to the position at the end of September 2009.

The bank restructured loans aggregating Rs 60 crore during the second quarter but the cumulative value of restructured assets fell to Rs 2,061 crore.After hitting a 52-week high of Rs 1,608, shares of the bank fell 1.59 per cent below the previous close, to end at Rs 1,563.45 on the Bombay Stock Exchange.