Axis Bank net profit rises 18% on interest income, fees push

The third-largest private lender Axis Bank on Friday reported an 18 per cent growth in its profit after tax to Rs 1,842 crore on the back of a rise in interest and fee incomes.

"The earning was driven by a strong growth in net interest income. It was also supported by non-interest income, mainly fee and trading profit," Axis Bank Executive Director Somnath Sengupta told reporters during a conference call.

The bank's net interest income (NII) during the quarter rose 19 per cent to Rs 3,166 crore.

For the full fiscal, NII rose 24 per cent to Rs 11,952 crore.

For the full year, net profit rose 20 per cent to Rs 6,218 crore.

The bank recorded a net interest margin of 3.89 per cent in the quarter against 3.70 per cent in the same period last year.

"This improvement in NIM was mainly due to growth of the low cost Casa deposits and also as the share of retail deposit in our total deposits have also grown quiet strongly in the quarter," Sengupta said.

On a daily average basis, Casa deposits during the quarter grew 16 per cent constituting 39 per cent of total deposits.

The bank's scrip closed at 1,534.45 apiece, up 1.10 per cent, on the BSE.

Angel Broking's Vaibhav Agrawal said, "NII expectedly grew at a healthy pace of 18.8 per cent y-o-y, aided by loan book growth of 16.8 per cent y-o-y. Non-interest income performance was moderate with a 10.3 per cent growth."

"Though the near-term outlook for the bank remains challenging, given the current macro environment, from a structural point-of-view compared to peers, keeping in mind its robust franchise and capital adequacy, it remains one of the preferred banks," he said. .

Rahul Shah of Motilal Oswal Securities said Axis Bank is poised to deliver a strong growth in an upturn, given its diversified and granular balance sheet, higher return ratios, expanded branch network and healthy capitalisation.

As of end March, the domestic term deposits grew 36 per cent.

Gross NPAs stood at 1.22 per cent in the quarter against 1.06 per cent in the same period last year. Net NPAs was 0.40 per cent as against 0.32 per cent. The bank's provision coverage stood at 78 per cent.

Net slippages in the quarter was Rs 301 crore.

Recoveries and upgrades were Rs 149 crore and write-offs were Rs 14 crore. The balance sheet grew 13 per cent and stood at Rs 3,83,245 crores as on March 31.

The bank's advances grew 17 per cent to Rs 2,30,067 crore as at March-end. Domestic retail advances grew 31 per cent to Rs 70,745 crore and accounted for 36 per cent of net domestic advances of the Bank compared to 32 per cent last year.

"We are seeing some sluggishness in some of the products like real estate, car loans and commercial vehicle segment. However, it will change quickly if sentiments change a little bit. We are cautiously optimistic about the retail lending in the coming year," Sengupta said.