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Axis Bank posts three-fold rise in Q3 net profit on dip in provisions

The lender registered 18 per cent year-on-year growth in retail loans, 20 per cent growth in SME loans and 13 per cent growth in corporate loan book.

The credit card spend of the bank rose by 52 per cent from a year ago. (File)
The credit card spend of the bank rose by 52 per cent from a year ago. (File)

Axis Bank’s consolidated net profit for the December quarter zoomed nearly three-folds to Rs 3,973 crore, as the money set aside for any reverses on loans reduced to nearly a third of the year-ago period.

On a standalone basis, the third largest private sector lender on Monday reported a profit after tax of Rs 3,614.24 crore, as against Rs 1,116 crore in the year-ago period and Rs 3,133 crore in the preceding September quarter.

The bank’s core net interest income grew 17 per cent to Rs 8,653 crore on the back of a 17 per cent loan growth and a marginal expansion in the net interest margin to 3.53 per cent when adjusted for the benefit of a tax refund in the year-ago period.

Its non-interest income grew 15 per cent to Rs 3,344 crore, helped by a 16 per cent growth in the retail fees which now constitutes 65 per cent of the income line.

The overall provisions came down to Rs 1,334.83 crore for the bank, as against Rs 3,757.20 crore in the year-ago period, and the over Rs 5,000 crore in excess provisions for COVID were untouched.

Its Chief Executive and Managing Director Amitabh Chaudhry said the credit costs have come down courtesy the strategies adopted earlier like being very cautious with restructuring accounts or taking loans under the emergency credit line guarantee scheme (ECGLS), which were floated by the government and the RBI to help companies in stress in the wake of the pandemic-related lockdowns.

The bank took slippage in accounts head-on and provided for it, and later launched recovery efforts from the accounts that were slipped, he told reporters.

Its chief financial officer Puneet Sharma said it expects a further moderation in the credit costs – which came down to by 2.58 percentage points to 0.44 per cent on an annualised basis for the December quarter – as the share of lumpy wholesale stressed accounts has come down.

For the December quarter, its fresh slippages stood at Rs 4,147 crore as against Rs 7,993 crore in the year-ago period, the recoveries and upgrades increased to Rs 3,288 crore from Rs 2,162 crore, while the write-offs decreased to Rs 1,707 crore from Rs 4,257 crore in the year-ago period.

The share of the gross non performing assets in the overall loan portfolio reduced to 3.17 per cent from the 3.53 per cent in the quarter-ago period.

A bulk of the 17 per cent credit growth came from the mid-corporate segment which grew 44 per cent, the bank said, adding that serving multinationals’ finance needs is the other main focus area.

The bank witnessed a faster growth in credit card issuances, but like peers, reported a dip in the revolve ratios in credit cards which depresses incomes from the segment. Its head of retail lending Sumiot Bali, however, stressed that the credit card business continues to remain a profitable proposition and it will continue acquiring customers on it.

Bali said going ahead, the unsecured business will grow faster than the secured business, and the bank may look at a marginal increase in the share of the riskier loans. He said the bank is more confident about unsecured loans given the fact that the COVID-related worries are waning and the economic growth will be faster.

When asked about its interest in Citi India’s retail portfolio, Chaudhry said it is a “process” which is on right now, and declined any further comment. Media reports are calling the lender to be a frontrunner to acquire the American lender’s retail business.

The bank scrip closed 1.16 per cent down at Rs 704.35 apiece on the BSE on Monday, as against a 2.62 per cent correction on the benchmark.

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