Axis Bank on Wednesday reported a 26.4% year-on-year decline in its net profit for the quarter ended September to Rs 5,090 crore because of higher provisions. Provisions and contingencies increased 61% on year. Bloomberg estimated the net profit for the third-largest private lender at Rs 5,881 crore.
Following an RBI advisory, post its FY25 annual inspection, the bank in the reporting quarter made an additional one-time standard asset provision of Rs 1,231 crore for two discontinued crop loan variants. This standard asset provision will be written back to the P&L when all the outstanding loans in those two variants are recovered or closed in normal course or by March 31, 2028, whichever is earlier.
On various draft norms released by the Reserve Bank of India, Amitabh Chaudhary, managing director and CEO, said: “We are still waiting for the final guidelines on the reforms that the governor has talked about. We are hopeful that we can have a platform to capitalise on those opportunities. I have recently said acquisition financing is one such area, but we will wait for the final guidelines before we react.”
He said subsidiary Axis Finance is growing well and it has its own capital requirements. Axis Finance would become an upper layer NBFC very soon. “This ultimately means that we get on the path of listing at some stage in the future,” Chaudhary said.
The bank said no divergence in asset quality or NPA provisioning was identified in the said annual inspection. “The impact of the one-time standard asset provision on RoA and RoE is 23 basis points and 196 basis points, respectively,” Puneet Sharma, chief financial officer, said in the post-earnings analyst call.
The net interest income (NII) inched up nearly 2% to Rs 13,745 crore, higher than Bloomberg’s estimates at Rs 13,229 crore. Net interest margin (NIM) moderated to 3.73% from 3.80% a quarter ago. Analysts had projected the NIM at 3.6%.
Sharma said if there are no further repo rate cuts, margins are expected to bottom out in the next quarter. Other income fell by 1.4% on year to Rs 6,624.58 crore, which impacted the bank’s bottom line.
The balance sheet grew 11% on year and stood at Rs 16.76 lakh crore as on September 30, with advances and deposits seeing double-digit growths. Total deposits grew 11% on year, while advances rose 12%.
The growth in advances largely came from the corporate sector which grew 20%, while the retail book grew 6% and the SME book by 19%.
Within the retail book, the share of secured loans was nearly 72%, with home loans comprising 26%. The loan-against-property segment grew 22% to Rs 82,259 crore.
The credit card book was up 7% on year, and the bank added 1.07 million credit cards in Q2.
The gross NPA ratio improved to 1.46% from 1.57% a quarter ago while the net NPA ratio improved to 0.44% from 0.45%. The bank reported fresh slippages of Rs 5,696 crore, which is lower than Rs 8,200 crore in the previous quarter.
The bank reported upgrades and recoveries of Rs 2,887 crore and wrote off loans worth Rs 3,266 crore in the reporting quarter. The provision coverage ratio stood at 70% as on September 30. The cost of funds decreased by 30 bps on year and 24 bps on quarter to 5.15%.
On Wednesday, shares of Axis Bank closed 0.4% lower at Rs 1,172.50 on the National Stock Exchange. Results were announced post market hours.