Axis Bank Q2 net profit increases 22%

Riding on growth in interest, fee income and lower expenses

Private sector lender Axis Bank posted net profits of Rs 1,124 crore for the second quarter (July-September). This is a 22 per cent growth, year-on-year, on the back of growth in interest and fee income, as well as lower expenses.

The growth in the bank’s net interest income (NII) moderated to 16 per cent in Q2 of FY13 from 25 per cent in Q2 of Fy12, reflecting slowdown in credit demand and rise cost of funds. The NII rose to Rs 2,327 crore from Rs 2,007 in Q2FY12.

The bank’s net interest margins (NIMs) also dipped to 3.46 per cent from 3.78 per cent in Q2 of FY12.

According to Kashyap Jhaveri, banking analyst with Emkay Global Finance, Axis Bank’s NII and net profit was in line with consensus estimates driven by one-off capital gains.

REPORT CARD Quarter ended September 2012 (Rs crore)
	Sep ‘12	% Chg*
Interest earned	6,687.23	26.75
Other income	1,593.06	29.00
Total income	8,280.29	27.18
Interest expended	4,360.30	33.40
NII	2,326.93	15.93
Net profit	1,123.54	22.08
*change y-o-y            Source : Capitaline; Data compiled by BS Research Bureau

Its stock closed almost flat at 1,118.5 on the Bombay Stock Exchange.

The other income has grown by 29 per cent to Rs 1,593 crore. Its fee income was up 20 per cent at Rs 1,343 crore, the bank said in a statement after its board meeting in London.

The higher other income was more than offset by sharp doubling of provisions sequentially to Rs 510 crore. With restructuring at Rs 320 crore, the slippages may have remained high, said Jhaveri.

The bank has inducted Somnath Sengupta and V. Srinivasan on its board as executive directors with effect from on Monday.

The bank’s balance sheet grew by 21 per cent to Rs 3,02, 681 at end-September 2012. Its advances grew by 23 per cent to Rs 1,72,132 crore.

Axis Bank’s share of low cost deposits — current and savings accounts — stood at 41 per cent of total deposits, up from 39 per cent at end of June.

Its gross non-performing assets (NPAs) stood at 1.10 per cent at end-September as against 1.08 per cent a year ago. The provision coverage ratio was 80 per cent at end-September.

The bank restructured assets aggregating Rs 323 crore in Q2FY13. The cumulative value of assets restructured stood at Rs 4,068 crore (2.04 per cent of gross customer assets).

Its capital adequacy was 13.92 per cent (Tier-I - 9.92 per cent) at end of September 2012. The capital adequacy factors in net profit for April-September 2012.