Surpassing the analysts’ estimates, private lender Axis Bank on Wednesday reported 10% increase in net profit to Rs 5,864 crore in the second quarter of current financial year, supported by strong growth in interest income and loans. Bloomberg analysts expected the lender to post Rs 5,754 crore net profit in the second quarter.

The bank’s net interest income (NII), the difference between interest earned and paid, grew 19% year-on-year to `12,315 crore. The non-interest income (which includes fee, trading and miscellaneous income) rose 31% to Rs5,034 crore.

The private lender was able to buck the trend of contracting net interest margins (NIM) visible among other private banks. Its NIM improved to 4.11% during the quarter which was up 15 bps year-on-year and 1 bps sequentially.

The bank will continue to grow its personal loan portfolio and the management does not see any stress building in that portfolio.

“We are planning to grow and we continue to grow based on the risk guardrails that we have set for ourselves. This growth is not coming at the cost of any compromising on what we believe is the right kind of risk to take. Right now in our portfolio, we are not seeing anything which is telling us that our risk framework is not working,” said Amitabh Chaudhry, MD & CEO, Axis Bank, in the earnings call.

The bank issued 1.2 million new credit cards in the second quarter.

It also improved its asset quality during the quarter. The bank’s reported Gross NPA and Net NPA levels were 1.73% and 0.36%, respectively as on September 30, 2023 as against 1.96% and 0.41% as on June 30, 2023. Gross slippages during the quarter were Rs3,254 crore, compared to3,990 crore in the first quarter of current fiscal and `3,383 crore in Q2FY23.

Recoveries and upgrades from NPAs during the quarter were Rs1,985 crore. The bank wrote off NPAs aggregating Rs 2,671 crore during the quarter. Recoveries from written off accounts for the quarter was Rs 664 crore.

The bank’s advances grew 23% YOY to Rs8.97 trillion as of 30 September 2023.

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Domestic net loans grew 26% YOY and 5% QOQ. Retail loans grew 23% YOY and 4% QOQ to Rs5,19,736 crore and accounted for 58% of the net advances of the Bank. The share of secured retail loans was 76%, with home loans comprising 31% of the retail book.

The total deposits grew 18% YOY and 1% QOQ on period end basis, within which savings account deposits grew 16% YOY, current account deposits grew 7% YOY. The share of CASA deposits in total deposits stood at 44%.