Axis Bank on Thursday reported a lower-than-expected rise in its quarterly profit as the loan growth slowed and it set aside more funds against potential bad loans. The standalone net profit, excluding earnings of its subsidiaries, rose 3.8% to Rs 6,303.77 crore for the quarter ended December, compared with Rs 6,071.1 crore a year ago.
Interest income rose 10.7% to Rs 30,954 crore while the net interest income grew 8.6% year-on-year to Rs 13,606 crore, compared with Rs 12,532 crore. The net interest margin for the quarter under review stood at 3.93%.
The operating profit grew 15% to Rs 10,534 crore. The core operating profit rose 14% YoY to Rs 10,102 crore.
The growth in both advances and deposits was the slowest in 15 quarters. Deposits grew 9% to Rs 10.95 lakh crore. On a sequential basis, the deposit growth was 0.84%. Advances were up 8.8% from last year to Rs 10.14 lakh crore. Sequentially, the loan growth stood at 1.46%.
“The deposit journey for Axis Bank should be looked at from three aspects – quality, cost and growth. On the first two parameters, we have delivered well,” said Amitabh Chaudhary, MD and CEO, in the post-earnings media call.
The management highlighted that the new-to-bank acquisition engine for the savings franchise has strengthened this quarter.
The bank will continue to focus on garnering deposits. On a month-end balance basis, total deposits grew 9% year-on-year and 1% quarter-on-quarter.
Retail loans grew 11% year-on-year while loans to small and medium enterprises rose 15%. The growth in the corporate book remained steady. Loans to SMEs and mid-corporate, the bank’s focus area, stood at Rs 2,30,055 crore, comprising 22.7% of advances.
Around 90% of fresh slippages came from the retail segment in the third quarter of the current financial year, said chief financial officer Puneet Sharma. According to the investor presentation, fresh slippages stood at Rs 5,432 crore in Q3FY25, compared with Rs 3,715 crore in the year-ago period.
The GNPA ratio rose 2 basis points to 1.46%, from 1.44% in Q3FY24. The NNPA ratio was largely steady, declining 1 bps to 0.35%.
However, provisions and contingencies for the third quarter of FY25 rose to Rs 2,156 crore, compared with Rs 1,028 crore in the same quarter of the previous fiscal.