Axis Bank Q3 net up 24% on robust interest, fee incomes

Axis Bank's net profit increased by 24 per cent to Rs 1,102 crore for the quarter ended December 31, 2011, from Rs 891 crore in the corresponding year-ago quarter, on the back of robust growth in both interest and fee income.

The bank's performance in the just-ended quarter was satisfactory, although it was a challenging quarter, said Mr Somnath Sengupta, ED and CFO, Axis Bank.

Growth in fee income was broad based and from all segments such as retail, corporate and treasury. Advances growth too was across all segments, although retail advances grew at a faster pace than corporate, small and medium enterprises and agriculture.

Retail advances grew by over 32 per cent, large and mid-corporate by 19 per cent and SME by 21 per cent.

“We have been focusing on retail loans — home and auto loans — for some time now because it was a small segment for us. The share of retail loans to total advances has increased to 22 per cent from 20 per cent last year. Also, generally there was lower demand in corporate and infrastructure loans, though that was not why we focused on retail segment,” Mr Sengupta said.

While rise in cost of funds by 155 basis points led to a slight decline in Net Interest Margins, the 32 per cent growth in low-cost CASA (current and savings accounts) helped to protect margins to some extent.

Going ahead there could be some contraction in NIM as cost of funds may go up on account of migration from demand deposits to term deposits.

In the December-ended quarter, the bank added Rs 535 crore to gross non-performing assets (NPAs). Gross NPAs increased to Rs 1,915 crore (Rs 1,483 crore). Accordingly, provisions have increased to Rs 422 crore (Rs 314 crore).

“NPAs are a challenge for all banks. We don't expect gross NPAs to increase more,” Mr Sengupta said.

About the huge growth in deposits, Mr Sengupta said the bank focused on CASA and placed lot of emphasis on retail term deposits.

Credit growth

In the fourth quarter, credit growth is likely to pick up as banks try to meet their priority sector requirements, he added.

Within non-interest income, trading profits were lower at Rs 118 crore (Rs 135 crore), due to diminishing trading opportunity in the high interest rate environment, Mr Sengupta said.

Shares of Axis Bank closed at Rs 1,008, up 5.9 per cent, on the BSE on Friday.

priyan@thehindu.co.in