Axis Bank, the third-largest private sector lender in the country, on Friday said its net profit for the quarter ended December 31 rose 24 per cent to Rs 1,102 crore from Rs 891 crore a year ago. Higher interest income from advances and growth in earnings from fees and commissions aided the bank’s profitability.
Net interest income, or the difference between interest income and interest expenditure, stood at Rs 2,140 crore during the period, a rise of 23.5 per cent over the year-ago period.
The bank’s net interest margin narrowed by three basis points sequentially and six basis points from a year earlier to 3.75 per cent, as a rise in the cost of deposits outpaced the increase in yields on advances. On a year-on-year basis, the cost of deposits rose by 155 basis points, while yields on advances rose by 145 basis points.
“Our outlook is the net interest margin would probably diminish in the coming quarters, as the cost of deposits may go up further due to migration to term deposits. Also, yields on advances would contract in the fourth quarter, as we would have to step up our priority sector advances. We are comfortable if the net interest margin remains in the 3.3-3.5 per cent range over the long term,” said executive director and chief financial officer Somnath Sengupta.
Fee income rose 26.3 per cent to Rs 1,222.56 crore, compared to the year-ago period.