Axis Bank posted a 21 per cent rise in net profit at Rs 1,362 crore in the July-September quarter, driven by interest income, higher margins and retail loan growth.
The country’s third largest private sector bank had reported a net profit of Rs 1,124 crore in the year-ago period.
Net interest income (difference between interest earned and expended) rose 26 per cent to Rs 2,937 crore, Other income was up 11 per cent to Rs 1,766 crore from Rs 1,593 crore in the year-ago period.
Despite liquidity tightening measures taken by the central bank in July, Axis Bank’s net interest margin (NIM) grew to 3.79 per cent in Q2 FY14 (from 3.46 per cent in Q2 FY13) due to lower cost of funds arising out of unutilised forex borrowings. The bank borrowed Rs 2,000 crore from overseas markets earlier this year.
“We transferred 96 per cent of our government securities held in the available-for-sale bucket (about Rs 7,566 crore) to the held-to-maturity category and booked a mark-to-market loss of Rs 114 crore (as compared to a loss of Rs 207 crore in Q2 FY13) with a trading profit of Rs 5 crore,” said Somnath Sengupta Executive Director, Axis Bank. Gross non-performing asset (NPA) ratio increased to 1.19 per cent from 1.10 per cent in Q2 last year. Net NPA ratio also increased marginally to 0.37 per cent, as against 0.33 per cent in Q2 FY13.
Asset quality stress is likely to stay for the next two quarters of this fiscal, Sengupta said.
As on September 30, 2013, the bank’s total advances grew 17 per cent year-on-year on the back of retail and SME (small and medium enterprise) loans growing at 37 per cent at 29 per cent, respectively.
According to Sengupta, the retail and SME segments would continue to drive loan growth as the investment cycle has slowed due to the macroeconomic situation. Overall, loan growth is likely to remain slow in the next two quarters.
Total deposits grew at a moderate 8 per cent. “Our deposit growth remained muted as our wholesale term deposit growth has been lower,” Sengupta added.
The shares of Axis Bank ended 1.26 per cent higher, at Rs 1,094.95 apiece, on the Bombay Stock Exchange.