Axis Bank on Monday reported a net profit of Rs 5,853 crore for the quarter ended December 31, higher by 62% year-on-year. The profit, which was higher than the average estimate of Rs 5,342 crore by analysts in a Bloomberg survey, jumped despite an 8% Y-o-Y increase in provisions to Rs 1,438 crore.
The increase in the provision was on account of a one-time prudent provision of Rs 340 crore for a large account, which is not yet 90 days past due, but the lender has qualitatively classified it as an non-performing asset.
The bank saw a 51% jump in its pre-provisioning operating profit (PPOP) to Rs 9,277 crore on account of a smart 21% increase in non-interest income. The growth in the other income was owing to retail fee income, cards fees and trading gains.
Net interest income (NII) grew 32% to Rs 11,459 crore while the net interest margin (NIM) stood at 4.26% as of December 31, up 73 bps YoY and 30 bps QoQ. The bank expects liability costs to increase over the next few quarters with limited compensation from repricing on assets, CFO Punit Sharma said, adding that the lender has built a cushion for maintaining its margin.
Net advances grew 15% YoY to Rs 7.6 trillion, with retail loans growing at 17% to Rs 4.3 trillion, consisting of 56% of the total book. The corporate loan book grew 8% YoY to Rs 2.5 trillion. Deposits rose 9% to Rs 8.5 trillion, with the CASA ratio improving to 44%, higher by 18 bps YoY.
Gross non-performing asset ratio (NPA) stood at 2.38% as of December 31, lower by 79 bps YoY and 12 bps QoQ. The net NPA ratio was at 0.47%, down 44 bps YoY and 4 bps sequentially.
The bank saw an increase in gross slippage of Rs 410 crore on account of a one-time account. Gross slippages during the quarter were at Rs 4,147 crore while recoveries and upgrades from NPAs were at Rs 2,088 crore.