Axis Bank Q1 profit up 32%, shares at record high

Total deposits grew 34 per cent to Rs 147,479 crore.

Axis Bank, the nation’s third-biggest private sector lender, said its net profit rose 32 per cent to Rs 742 crore in quarter ended June, as loans grew 39 per cent, about twice the credit growth of the banking system. The demand came largely from large and mid-sized companies and telecom firms.

The bank’s net interest income, or the difference between income from loans and payment on borrowing funds, rose 45 per cent to Rs 1,514 crore, the bank said. The bank’s 40 per cent deposits were in current accounts and savings accounts. Total deposits grew 34 per cent to Rs 147,479 crore.

It reported a net interest margin (NIM) of 3.7 per cent compared with 3.4 per cent in the year-ago quarter. NIM in the quarter ended March was higher at 4. 1 per cent, it said. The bank’s capital adequacy, a key indicator of strength, was 14.5 per cent as on June 30, compared with 15.3 per cent in the year-ago period.

The shares of Axis Bank rose 2.5 per cent to Rs 1,346.70. The stock was at Rs 705.15 a year earlier.
 

SETTING PACE Performance on quarter ended June
(in Rs crore)	Jun ‘10	% Chg*
Interest earned	3,325.59	14.50
Other income	1,000.78	4.40
Total income	4,326.37	12.00
Interest expended	1,811.82	-2.60
NII	1,513.77	44.77
Net profit	741.88	32.00
Source : Capitaline *Over previous year Data compiled by BS Research Bureau

Growth in loans was led by large and mid-level companies, which accounted for about 69 per cent loans, Somnath Sengupta, an executive director and chief financial officer, said over the phone. Telecom companies led the borrowing among infrastructure companies, he said.

The bank expects growth in loans to moderate in the coming quarters but aims to grow 1.3 times the average industry growth. The bank restricted its non-performing assets at 1.1 per cent of its loans.

The bank may consider raising funds by selling bonds to overseas investors, though it is yet to decide the time and the amount it will raise. The bank had no immediate plan to raise money selling shares to qualified institutional investors, he said.

Axis Bank was open to inorganic growth if an opportunity arose, said Sengupta. The bank’s rival, ICICI Bank, is in the process of absorbing Bank of Rajasthan. HDFC Bank acquired Centurion Ban k of Punjab a few years back.

“We have been growing quite rapidly on our own and our compounded annual growth rate over the past five years has been 35-40 per cent,’’ said Sengupta. “We keep evaluating all opportunities all the times.’’

One of Axis Bank’s clients, Rajshree Sugars & Chemicals, on July 14 said it was settling a derivatives contract dispute with the bank pending with the Madras High Court.

“Some resolution is being worked out,’’ said Sengupta, declining to give details. “There will be a settlement.”