Axis Bank Q1 profit nearly doubles as provisions plunge

MD says the bank hasn’t yet decided a date on integration of Citibank India’s consumer portfolio business and will do so over a certain period of time

The bank’s provision coverage ratio stood at 77% as of June 30 as compared to 70% a year ago.

Private sector lender Axis Bank on Monday posted a massive 91% year-on-year (y-o-y) increase in its net profit for the three months ended June 30 to Rs4,125 crore, aided by an almost equivalent decline in its provisions and a lower base. The lender reported 89% y-o-y decline in its provisions to Rs359 crore in Q1FY23.

At an operational level, however, the bank reported a 5% y-o-y fall to Rs5,887 crore due to a decline in other income. Non-interest income for Q1FY23 stood at Rs2,999 crore, down 11% y-o-y on account of treasury losses. Net interest income (NII) grew 21% y-o-y to Rs9,384 crore, which aided an expansion in net interest margin (NIM), which expanded 14 basis points y-o-y to 3.60% as of June 30. The declining cost of funds also aided margin growth.

The bank’s gross non-performing asset (NPA) ratio declined 109 bps, sequentially, to 2.76% as on June 30 while net NPA was at 0.64% as against 0.73% as of March 31 and 1.20% a year ago.

Fresh slippages were at Rs3,684 crore, lower by 43% y-o-y while recoveries and upgrades were at Rs2,957 crore.

The bank’s provision coverage ratio stood at 77% as of June 30 as compared to 70% a year ago.

The total deposits grew 14% y-o-y on to Rs8.03 trillion while the share of current account savings account (Casa) deposits in total deposits stood at 43% as of June 30. The bank’s advances grew 14% y-o-y to Rs7.01 trillion led by retail loans, which amounted to 59% of net advances.

While the bank has not yet decided a date on the integration of Citibank India’s consumer portfolio business, it will do so over a certain period of time as the bank has rights to use Citi brand name and the gradual absorption will also enable Axis Bank to maintain customer experience, Amitabh Chaudhary, managing director and chief executive officer, Axis Bank, said.

Also, the bank cannot engage with Citibank India extensively till it gets approval from the Competition Commission of India (CCI), which is expected to come in 6 to 8 weeks, he said.

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