Axis Bank reported an 18 per cent rise in net profit for the three-month period ended December 31, 2014 at ₹1,900 crore, driven by healthy treasury income, stable loan growth and interest income.
The profitability comes despite operating expenses growing by 15 per cent (to ₹2,314 crore) and higher provisions towards bad loans at ₹507 crore (₹202 crore in the same period last year).
“It was a good quarter on the back of healthy trading gains… and with an annualised return on assets (1.78 per cent) and return on equity (17.55 per cent),” said Sanjeev Gupta, Executive Director and CFO, Axis Bank.
Net interest income (difference between interest income and expense) increased by 20 per cent, while non-interest income grew by 24 per cent driven by jump in trading profit at ₹329 crore as against ₹35 crore in the December quarter last year.
Total advances As on December 31, 2014, total advances for the quarter grew by 23 per cent year-on-year with key growth coming in from vehicle, unsecured and consumer durable loans.
“Both policy measures from the government and monetary easing cycle will translate into growth…We expect some activity (capex) to pick up towards the middle of the next financial year,” Gupta added.
Sequentially, net interest margin (NIM) dipped marginally to 3.93 per cent from 3.97 per cent due to 10 basis points (bps) cut in base rate to 10.15 per cent in October.
On the asset quality front, the gross non-performing asset (NPA) ratio increased slightly to 1.34 per cent for the quarter from 1.25 per cent as on December-end 2013.
“Due to the RBI guideline (on restructuring of advances) from April 1, we expect high amount of restructuring in the last quarter…NIM will be around 3.7 per cent for the full year FY15,” Gupta said.
In the next year, Axis Bank also plans to raise capital of up to ₹15,000 crore on a private placement basis.
The bank’s Board has approved the issuance of long-term bonds/non-convertible debentures.