Beating analysts’ expectations, Axis Bank on Thursday reported an 18% rise in net profit to Rs 6,918 crore in the September quarter, helped by a healthy growth in advances. Analysts polled by Bloomberg had estimated the bank to post Rs 6,381-crore net profit.
Net interest income grew by 9% to Rs 13,483 crore in the second quarter from Rs 12,315 crore in the same quarter in the previous year.
“Quality and strength of deposits continue to improve,” MD & CEO Amitabh Chaudhry said in an earnings call. “Our credit-deposit ratio currently is in line with the discussions we are having with the regulator. RBI has had discussions over credit-deposit ratio with various banks including us,” he said.
Total advances rose 11% year-on-year to Rs 9.99 lakh crore. Retail loans grew 15% to Rs 5.98 lakh crore and accounted for 60% of the net advances. The share of secured retail loans was around 71%, with home loans comprising 28% of the retail book.
The net interest margin stood at 3.99% in the second quarter, down from 4.05% in the first quarter of the current fiscal.
“The decline in margins is not due to a drop in spreads,” said Puneet Sharma, chief financial officer, adding that the bank reported a tax refund last quarter, which was not there in the July-September period. “We have not seen a drop in spreads, primarily because we have been disciplined in our deposit pricing,” he said.
Total deposits were up 14% from a year ago at Rs 10.87 lakh crore. Term deposits rose 21% from last year to Rs 6.24 lakh crore, while the current account savings account (CASA) deposits accounted for 40.6% of the deposit portfolio, compared with 43% a year ago.
“This quarter we balanced digital prowess and advancement with physical expansion and proximity to our customers. We have opened 150 new branches in the last three months, both urban and rural,” Chaudhry said.
The bank improved asset quality during the quarter with the gross non-performing asset (NPA) ratio falling to 1.44% as of September 30, compared to 1.54% in the previous quarter. The net NPA ratio remained steady at 0.34%. Gross slippages stood at Rs 4,443 crore, compared with Rs 4,793 crore in the June quarter.
Upgrades and recoveries were at Rs 2,069 crore, compared to Rs 1,503 crore sequentially. Write-offs during the September quarter were higher at Rs 3,119 crore, up 41% quarter-on-quarter.