Axis Bank Q2 net up over 18% at Rs1,611 crore

Axis Bank on Friday reported an over 18.2 per cent increase in its fiscal second quarter net profit at Rs1,611 crore helped by a retail loan boom that pushed its core interest income.

Axis Bank, India's third-largest private sector lender, had reported a net profit of Rs1,362 crore in the corresponding period of the previous year.

During the quarter, the bank saw its net interest income increase by a healthy 20 per cent to Rs3,524 crore, S K Gupta, executive director and chief financial officer of Axis Bank, said.

Interest income increased on the back of an increase in margins, ie the difference between lending and deposit rates, in the high-margin retail loans to 27 per cent, which pushed the overall credit growth to 20 per cent, Gupta said.

"Last year, retail credit growth was 3-4 per cent higher than non-retail book. This year we feel it will be faster than that," Gupta said.

Axis Bank also saw a 10.28-per cent rise in other income during the quarter at Rs1,947 crore, aided by an 11 per cent increase in its core fee income to Rs1,590 crore.

Although miscellaneous income saw a 73.82 per cent dip at Rs86.22 crore, this was offset by Rs282 crore repatriation from overseas branches.

Net interest margin (NIM) for the second quarter stood at 3.97 per cent, up 0.09 per cent compared to 3.88 per cent in the previous quarter ended 30 June 2014. ''Margins improved as the yield on advances rose by over seven basis points, over the year. The share of retail deposits has also gone up. As the cost of funds has gone down, we expect to maintain our margins around 3.5 per cent for the year,'' Sanjeev Gupta, executive director (corporate centre) and chief financial officer, said in a conference call.

Gupta said the bank also expected to maintain the credit growth momentum and was targeting a 20 per cent rise and a deposit growth of up to 15 per cent.

The private sector lender's advances as of 30 September 2014 stood at Rs2,40,000 crore, up 20 per cent from Rs2,00,000 crore a year ago. Domestic retail advances rose 27 per cent from last year to Rs90,277 crore during this period.

Deposits were up 11 per cent year-on-year, at Rs2,84,000 crore at the end of the September quarter, compared with Rs2,55,000 crore a year ago. Retail term deposits and current account savings account (CASA) deposits constituted 79 per cent of total deposits as of 30 September, compared with 69 per cent last year.

''We expect to record a 20 per cent growth in credit for the year, while our deposits will see a 14-15 per cent growth,'' Gupta said.

The bank's asset quality remained stable with net non-performing assets (NPAs) as a percentage of net advances remaining flat at 0.44 per cent in the July-September quarter in comparison with the quarter ended 30 June. On a year-on-year basis, net NPAs worsened from 0.37 per cent in September 2013.

The bank restructured loans worth Rs570 crore during the quarter, higher than the Rs480 crore worth of loans it recast in the April-June period.

''We had guided that this fiscal we will add Rs6,500 crore worth of stressed assets. In the first half we have added about Rs2,700 crore. So we will stick to our guidance,'' Gupta said.

The bank raised provisions by 5.45 per cent to Rs725 crore in the quarter ended September from Rs687.49 crore in the year earlier.

Axis Bank's capital adequacy ratio expressed as a ratio of capital to risk-weighted assets under Basel III dropped to 14.84 per cent during the second quarter, from 15.85 per cent a year ago.