Axis Bank Q3 net up 14.5% at Rs2,175.3 cr despite higher bad loan provisioning

Private sector lender Axis bank has reported a 14.5 per cent year-on-year  increase in net profit for the quarter ended 31 December 2015 at Rs2,175.3 crore, even as an asset quality review conducted by the Reserve Bank of India (RBI) saw a big jump in the bank's gross bad loans.

Axis Bank set aside Rs712.59 crore as bad loan provisions compared with Rs707 crore during the September ended quarter. The bank's provision coverage ratio stood at 72 per cent.

For the October-December quarter, the bank reported a net profit of Rs2,175.3 crore compared with Rs1,899.76 crore in the year-ago quarter.

The private sector lender reported weaker asset quality indicators at the end of the December quarter. Net NPAs at the end of the third quarter stood at 0.75 per cent, up from 0.48 per cent reported in the second quarter.

Gross NPAs in absolute terms stood at Rs5,724 crore at the end of the December quarter compared with Rs4,451 crore at the end of the September quarter. As a percentage of total advances, gross NPAs rose to 1.68 per cent as of 31 December 2015, compared with 1.38 per cent at end September 2015.

The cumulative value of net restructured advances as of 31 December 2015 stood at Rs7,745 crore, compared with Rs8,426 crore reported as on 30 September.

''As a prudent measure, the Bank has fully recognized the necessary impairment and the resultant provisioning impact of the asset reclassification as per RBI's (Reserve Bank of India) assessment in the current quarter itself,'' Axis Bank said in its statement.

While income from lending operations and fee income saw increases during the quarter, the bank saw a drop in its lending margins.

Net interest income (NII), which is the difference between interest earned on loans and that paid on deposits, for the third quarter stood at Rs4,162 crore, up 16 per cent from Rs3,589.56 crore a year ago. Net interest margin (NIM) stood at 3.79 per cent as of 30 September, a drop from 3.85 per cent reported in the July-September period.

Other income stood at Rs2,337.78 crore in the three month period, up 14.6 per cent from a year ago, the bank said in a press release.

The key driver of growth in fee income was the fee generated through Axis Bank's retail business, which grew by 14 per cent year-on-year and constituted 40 per cent of the bank's total fee income, the bank said in a statement. Transaction banking fees grew 9 per cent year-on-year and constituted 20 per cent of the total fee income.

Axis Bank, however, did not make any sale of stressed loans to asset reconstruction companies (ARCs) during the October-December quarter. Slippages during the quarter stood at Rs2,082 crore while recoveries and upgrades were at Rs156 crore, the statement said.

Shares of Axis Bank closed at Rs388.65 on the BSE, down 1.13 per cent from its previous close.