Axis Bank Q1 Net rises 18 pc on sharp drop in provisions

Axis Bank, country's third largest private lender, today reported 18 per cent growth in profit after tax at Rs 1,667 crore on drop in provisions which nearly halved during the three months to June.
The bank had earned a net profit of Rs 1,409 crore in the first quarter of 2013-14.
The city-based bank's provisions nearly halved to Rs 386.60 crore in the reporting quarter from Rs 712.25 crore in the same period last year.
This is despite the fact that the bank saw its gross NPAs rising to 1.34 per cent from 1.10 per cent, and net NPAs to 0.44 per cent during the reporting quarter from 0.35 per cent a year ago.

Explaining the reasons for lower provisions, Axis Bank's Executive Director Somnath Sengupta said, "Our total provisions came down due to the depreciation on investment, which was much higher in the year-ago period when we had provided Rs 120 crore and we have got a write back of Rs 15 crore on the mark-to-market loss on the wholesale book this year."
Addressing the media in a post-earnings conference call, he said the bank also had some reduction in NPA provisions which also resulted in drop in overall provisions.

Net interest income (NII), which is the interest it earned on advances during the period, rose 16 per cent to Rs 3,310 crore from Rs 2,865 crore in the year-ago quarter.

Net interest margin, the spread between what it pays on deposits and what it earns from on-lending, remained stable at 3.88 per cent in the period against 3.86 per cent last year. He said the bank expects NIM to be above 3.5 per cent going forward.
Unlike its peers and the state-run banks, Axis Bank did not sell any bad loans to asset reconstruction companies in the quarter, he said.
Gross slippages stood at Rs 626 crore and the bank restructured Rs 480 crore worth loans in the quarter, taking its total CDR book to Rs 6,289 crore.
Recoveries and upgrades were Rs 97 crore and write-offs were Rs 212 crore. The bank provision coverage was 77 per cent, which included prudential write-offs. Sengupta said the total provision for unhedged forex exposure in the quarter was Rs 48 crore.

Bank's other income, comprising fee, trading profit and miscellaneous incomes, dropped around 5 per cent to Rs 1,691 crore from Rs 1,781 crore a year ago.
"The drop in the other income is really reflective of the slowdown on the corporate business in the system as a whole. Therefore, fee income, which we normally get from loan processing fees or debt syndication, has been much slower," Sengupta said.
Fee income in the quarter grew 5 per cent to Rs 1,378 crore mainly on account of retail banking which grew 22 per cent.
The bank's shares closed at Rs 2,017.60 apiece, down 0.27 per cent on the BSE today.