Axis Bank Q1FY25 results: Net profit increases 4% to Rs 6,035 crore

Axis Bank on Wednesday reported a subdued growth in net profit for the quarter ending June 2024 (Q1FY25), primarily impacted by a significant increase in loan loss provisions.

The private sector lender’s net profit was up 4 per cent at Rs 6,035 crore in Q1FY25, compared to Rs 5,797 crore in the corresponding period a year ago. However, net profit was down 15 per cent sequentially from Rs 7,130 crore. Analysts at Bloomberg had estimated a net profit of Rs 6,510 crore.

The bank’s net interest income (NII) increased 12 per cent year-on-year (Y-o-Y) and 3 per cent sequentially to Rs 13,448 crore in Q1FY25, aided by steady growth in advances. Net interest margin (NIM), a measure of profitability for banks, stood at 4.05 per cent, down 1 basis points (bps) sequentially, and 5 bps from the year-ago period.

Provisions and contingencies of the lender for the quarter stood at Rs 2,039 crore, compared to Rs 1,185 crore in Q4FY24 and Rs 1,035 crore in Q1FY24.

Loan loss provisions more than doubled on Y-o-Y basis and was up 3 times sequentially to Rs 2,551 crore.

The bank witnessed a decline in asset quality compared to the previous quarter. It reported a gross NPA ratio of 1.54 per cent in Q1FY25, up 11 bps sequentially. Similarly, net NPA ratio moved up 3 bps sequentially to 0.34 per cent.

The lender’s senior management attributed the rise in gross NPA ratio to seasonality, because typically in April-June and October-December quarter slippages from retail agriculture loans go up. Additionally, the management said recoveries and upgrades on corporate accounts being deferred also added to the slippages.

Further, the bank is seeing some unsecured loan segments showing higher credit costs, but it is within the guardrails of the bank and is not of concern so far, the management said.

The bank reported gross slippages of Rs 4,793 crore in Q1FY25, compared to Rs 3,471 crore in Q4FY24. Of the total gross slippages in Q1FY25, Rs 4,200 crore has come from retail portfolio, the bank management said.

Advances of the lender reported a 14 per cent Y-o-Y and 2 per cent sequential increase in Q1FY25 at Rs 9.80 trillion, with retail loans growing by 18 per cent Y-o-Y, and corporate book increasing by 10 per cent Y-o-Y.

Total deposits were up 13 per cent from a year ago, and down 0.6 per cent sequentially at Rs 10.62 trillion, of which current account deposits grew 12 per cent Y-o-Y, and total term deposits grew 20 per cent Y-o-Y. The share of CASA (current account saving account) deposits in total deposits stood at 42 per cent. Typically, Q4 is a strong quarter for deposit accretion, the bank management said, adding that they have been competitive on interest rates on deposits and are committed to stay competitive to garner more deposits.