Living up to market expectations, Axis Bank posted a 32% increase year-on-year in its net profit to Rs 742 crore in the first quarter of the current fiscal. The bank?s total income rose 12% y-o-y to Rs 4,326 crore, driven by an increase in the loan book of 39% and a higher fee income, which increased 19%.
The bank recorded a net interest margin (NIM) of 3.71%. It is higher than the 3.34% NIM posted during the June 2009 quarter, but lower than 4.09% registered during three months to March, 2010. Somnath Sengupta, executive director & CFO, Axis Bank, said, “The dip in NIM compared to previous quarter was primarily on account of the increase in cost of savings bank deposits, on which interest is now being paid on the basis of the daily average and higher reserve requirements as mandated by the central bank.? That apart, the bank also paid out more for term deposits.
Nevertheless, the bank’s net interest income increased by a strong 45% to Rs 1,514 crore with the weighted average cost of funds at just 4.6%, the yield on assets at just over 8% and the big jump in the bank’s loan book which grew a strong 39% y-o-y. Loans to large and mid-sized companies account for the bulk of Axis Bank?s asset book, at 55%, while loans to retail customers account for 19% and advances to the SME space for 16%. Said Sengupta, ?The mix might alter slightly with the share of loans to coroporates coming down slightly to around 50% and the share of retail assets going up.?
During the three months to June 2010, advances to retail borrowers grew by 25% whereas loans to the SME sector grew 18% and loans to the agriculture space grew 28%. Advances to bigger companies grew by 50%.
Axis Bank’s current account and savings account deposits at the end of the quarter accounted for just over 40% of its total deposits. During the quarter, the bank?s net non-performing assets(NPAs) stood at a slightly lower 0.35% compared with the March 2010 quarter while it added Rs 421 crore to gross NPAs.
Sengupta said, ?The bank has managed to maintain the credit quality. The provisioning coverage ratio has gone up significantly to 76.6% in Q1 from around 16% in the corresponding quarter last fiscal.? The bank restructured loans of Rs 30 crore during the three months to June 2010.