Axis Bank has reported a healthy 18.93% rise in its net profit for the quarter ended September. In a conference call with journalists, V Srinivasan, who has been elevated to the position of deputy managing director, and Sanjeev K Gupta, executive director (Corporate Centre) & CFO, said the bank’s margins are unlikely to alter materially on the back of a base rate change. Excerpts:

What is your guidance on stressed assets?

At the beginning of the year, our initial guidance was for incremental stressed asset creation to be lower than last year and credit cost of around 90 bps. Our guidance for the full year remains unchanged at the end of Q2.

When do you see capex cycle turning around and corporate loans picking up?

I think it does not switch on and off in any one quarter. As we approach the new financial year and rates sort of come down a bit more, I think you would see a lot more risk appetite in terms of investment. So, we should wait towards the end of this fiscal or the early part of next fiscal to see some investment demand come back.

How do you see the pick-up in home loans, especially after a cut in base rates?

We expect the demand in the second half to be higher than the early part of the year on account of the festive season and lower rates. In the first half, credit growth in the retail segment was about 26%. We believe that for the full year, the credit growth in the retail would be around 25%.

Did you sell any assets to ARCs this quarter?

We sold two assets to ARCs worth R1,850 crore.

How much of your loan book is linked to the base rate? How much impact will the base rate change have on margins?

Roughly 82% of our loan book is based on the base rate. All banks have lowered their base rate on the back of easy liquidity and lower deposit rates. So, we have been passing on the benefit of lower cost of funds through reduction in base rate. We believe that our margins are unlikely to change materially on the back of a base rate change.

Are you seeing some sort of stress building up in the infra sector?

In terms of incremental investment demand, it continues to stay muted. What we have on our books in terms of infrastructure sector, the steps taken by the government are in the right direction. We believe that this is going to be useful in terms of the sector coming out in a much better shape over the course of the next few quarters.

Your NIMs were at 3.85%. What were your NIMs in the same quarter last year as well as the first quarter this year?

In the first quarter this year, it was 3.81%, while in the same quarter last year, it was 3.97%. The rise in NIMs this quarter compared to last quarter was because of a reduction in cost of funding by 13 bps on a quarter-on-quarter basis.