on Monday reported a sharp 62% year-on-year (YoY) growth in net profit for the quarter ended December to Rs 5,853 crore. The net profit was way higher than ET Now poll of Rs 5,500 crore.
Net interest income grew 32.4% YoY to Rs 11,459 crore. Net interest income is the difference between interest earned and interest expended.
The beat in the bottomline was despite a rise in the lender’s provisions. Provisions and contingencies in the quarter rose nearly 8% YoY to Rs 1,438 crore.
However, the private sector lender’s asset quality improved both YoY and sequentially during the quarter. Gross non-performing assets ratio as a percentage of total loans was down at 2.38% from 3.17% a year ago and 2.50% a quarter ago.
Net non-performing assets ratio as a percentage of total loans dropped to 0.47% from 0.91% a year ago and 0.51% a quarter ago.
Gross non-performing assets ratio as a percentage of total loans was down at 2.38% from 3.17% a year ago and 2.50% a quarter ago.
Net non-performing assets ratio as a percentage of total loans dropped to 0.47% from 0.91% a year ago and 0.51% a quarter ago. The capital adequacy ratio based on Basel-III regulations stood at 17.60% as on December 31, compared with 16.52% a quarter ago. Strong growth in net interest income, higher fees and moderation in operating expenses led to a drop the bottomline, the lender said.
Net interest margin improved sharply in the quarter by 73 basis points YoY and 30 bps sequentially to 4.26%.
The fee income grew 23% YoY and 6% sequentially, with retail fee growing by 30% YoY and 8% sequentially.
The operating profit growth was robust at 51% YoY and 20% sequentially, with the core operating profit growing 53% YoY.
While operating expenses rose in the reported quarter, the pace of increase moderated. Operating expenses rose 8% YoY in the December quarter compared with the 14% rise in the September quarter.
The banking sector is in a good position to leverage on the momentum built over the last few quarters, said Amitabh Chaudhry, MD & CEO of Axis Bank.
“Axis Bank has been steadily enhancing its capabilities, buoyed by good business growth and great partnerships. The Citi merger has been shaping very well, and we are extremely happy with the response we are getting from customers and employees alike,” Chaudhry said in a release.
The provision coverage ratio remained healthy for the lender at 81%, and the annualised credit cost was 0.65% in the quarter gone by.
Asset quality
While the gross and net NPAs in percentage of the total loans came down in the quarter, the slippages increased for Axis Bank. Gross slippages rose by Rs 410 crore on account of non recurring or prudent items, the bank said.
“This adversely impacted reported gross slippages by 22 bps, reported net slippages by 22 bps, reported GNPA% by 5 bps, reported NNPA% by 1 bps,” it added.
Gross slippages during the quarter were Rs 3,807 crore, compared to Rs 3,383 crore in Q2 and Rs 4,147 crore in the same period a year ago.
The loan recoveries and upgrades from NPAs during the quarter were Rs 2,088 crore.
Consequently, the net slippages in NPAs, before writeoffs, for Q3 was Rs 1,719 crore, compared to Rs 557 crore in Q2, and Rs 860 crore in the same quarter last year.
In addition to recoveries and upgrades, recoveries from written-off accounts were Rs 608 crore, the bank said.
The fund based outstanding of standard restructured loans implemented under resolution framework for COVID-19 related stress declined during the quarter, and as on December 31, it stood at Rs 2,482 crore. This translates to 0.30% of the gross customer assets.
The bank carries a provision of 22% on restructured loans, which is in excess of the regulatory limits.
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