Private sector lender Axis Bank on Thursday posted a 70% year-on-year increase in its net profit in the second quarter of the current financial year to Rs 5,330 crore, on account of a massive 68% reduction in its provisions. Provisions stood at Rs 549 crore in Q2FY23. The bank’s pre-provisioning operating profit (PPOP) grew by 30% YoY to Rs 7,716 crore, despite a muted 4% growth in non-interest income. Other income stood at Rs 3,941 crore led by fee revenues, even as the lender saw a loss of Rs 86 crore in the trading segment.
Net interest margin (NIM) expanded by 57 basis points (bps) to 3.96% as on September 30. The bank saw a 31% YoY increase in net interest income (NII) to Rs 10,360 crore, led by loan growth of 18% YoY to Rs 7.31 trillion in Q2FY23 led by retail loans — which grew by 22% YoY — small business lending and credit card portfolio. The corporate loan book grew 7% to Rs 2.3 trillion, led by the mid-corporate book.
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As on September 30, the bank’s reported gross non-performing asset (NPA) ratio stood at 2.50%, lower by 103 bps YoY and 26 bps sequentially, while the net NPA ratio was at 0.51%, down 57 bps YoY and 13 bps QoQ. Gross slippages were at Rs 3,383 crore in Q2FY23, lower by 8% compared to the previous quarter, while recoveries and upgrades in Q2FY23 were at Rs 2,826 crore.
The bank has received approval from the Competition Commission of India (CCI) for the acquisition of the retail business of Citibank’s Indian arm, Amitabh Chaudhry, managing director & CEO, Axis Bank, said in a post-earnings conference call.“We expect to complete the transaction by the end of the fourth quarter of FY23, which is the legal closure date. At present, the integration management office, with a steering committee in place, is working across 17 key work streams around people, technology and business operations. The progress on customer communication, operational readiness and the performance of the existing Citibank consumer business is trending in line with our expectations,” Chaudhry said. The Citibank India retail business is in line with the valuation model Axis Bank used at the time of the deal, Chaudhry said, adding that the bank has downside protection; if the businesses deteriorate beyond a point, there would be a potential change in price.
“Right now, the business is tracking as we expected. Obviously, there is no need to talk about any change in price whatsoever. We want to clarify that the numbers are in line with expectations,” he said.Separately, Chaudhry also said that the bank believes rules and regulations have been followed with regard to acquisition of stake in Max Life Insurance Company. Earlier, the Insurance Regulatory and Development Authority of India (Irdai) had levied penalty of Rs 2 crore on Axis Bank and Rs 3 crore on Max Life Insurance for alleged irregularities in the valuation of shares. “We believe we have done everything the right way. Irdai has a different view. We are in conversation with them,” he said.