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Axis Bank Q2 profit rises 18.3%, asset quality stable

The News International Team

Private sector lender  Axis Bank met street expectations on Friday with the second quarter net profit rising 18.3 percent year-on-year to Rs 1,611 crore led by higher other income and net interest income but impacted by higher provisions. Profit in the year-ago period was Rs 1,362 crore.

Net income was expected at Rs 1,612 crore and net interest income at Rs 3,342 crore for the quarter, according to the average of estimates of analysts polled by CNBC-TV18.

Net interest income, the difference between interest earned and interest expended, jumped 20 percent to Rs 3,524.9 crore in the quarter ended September 2014 compared to Rs 2,937 crore in same quarter last year.

Other income (comprising fee, trading profit and miscellaneous income) grew by 10.3 percent on yearly basis to Rs 1,947.6 crore. Fee income rose by 11 percent Y-o-Y to Rs 1,591 crore while trading profit of the bank was Rs 271 crore and miscellaneous income stood at Rs 86 crore.

Operating expenses increased by 18.3 percent to Rs 2,310.16 crore during the quarter.

Provisions and contingencies shot up 5.5 percent year-on-year (up 87.5 percent sequentially) to Rs 725 crore in July-September quarter.

Asset quality in second quarter was stable with the gross non-performing assets (NPA) stood at 1.34 percent, unchanged compared to previous quarter (increased from 1.19 percent in the year-ago period). Net NPA was unchanged at 0.44 percent on sequential basis but on year-on-year basis, it rose marginally from 0.37 percent.

In absolute terms, gross NPA climbed 4.3 percent sequentially and 32 percent on yearly basis to Rs 3,613 crore and net NPA rose 6 percent Q-o-Q and 41 percent Y-o-Y to Rs 1,180 crore in the quarter gone by.

During the quarter, Axis Bank said it added Rs 911 crore to gross NPAs, adding recoveries and upgrades were Rs 164 crore and write-offs were Rs 597 crore.

The bank’s advances grew 20 percent year-on-year to Rs 2,42,198 crore at the end of September quarter. Retail Advances jumped 33 percent to Rs 94,321 crore in second quarter of current financial year 2014-15 compared to Rs 71,035 crore in same quarter last year.

“Savings bank deposits recorded a healthy growth of 20 percent Y-o-Y to reach Rs 79,875 crore as on September 2014 while current account deposits grew 8 percent Y-o-Y and stood at Rs 46,492 crore,” said the bank in its filing.

Most analysts were positively surprised by the numbers and said the bank may be among the outperforming banks. Suruchi Jain of Morningstar India believes the bank’s change in loan mix is helping the bank deliver robust numbers.

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