Axis Bank's profit rises 38% to ₹7,003 crore but falls short of forecasts

Axis Bank’s net profit rose 38% to ₹7,003 crore in the July-September quarter, up from ₹5,089 crore a year earlier, though the figure came in below what analysts had expected. Brokerages had pencilled in growth of 37-43% before the results.

Net interest income rose 12% to ₹15,371 crore and the net interest margin was 3.36%. Analysts had warned that the bank’s margin could slip by 7-12 basis points from the June quarter as it took in large foreign currency deposits.

Lending picks up

The bank’s advances grew 23% from a year earlier and 9% from June. Operating profit rose 6% to ₹11,083 crore. Core operating profit grew 11% to ₹10,998 crore.

Provisions and contingencies came to ₹1,694 crore, of which ₹1,564 crore was set aside for specific bad loans. The bank holds ₹15,860 crore of standard and additional provisions on top of what it carries against non-performing loans.

Asset quality improved. The gross NPA ratio fell 30 basis points from a year earlier to 1.16%, and the net NPA ratio to 0.35%. The net slippage ratio, a measure of fresh bad loans, eased to 0.75%.

Dollars from abroad

Like HDFC Bank and ICICI Bank, Axis leaned on foreign currency non-resident (FCNR-B) deposits during the quarter. It had raised $10.62 billion by 30 September and issued $4.69 billion of standby letters of credit to other lenders against loans backed by those deposits.

Part of the money went to replace bulk deposits from companies and institutions. Non-retail term deposits fell 8.6% from the June quarter.

Six months in

For the first half of the financial year, net profit rose 30% to ₹14,117 crore and net interest income 10% to ₹30,018 crore. Fee income grew 6% to ₹12,536 crore. Operating profit for the six months rose 4% to ₹22,742 crore, and core operating profit 11% to ₹22,120 crore from ₹20,010 crore.

Managing director and chief executive Amitabh Chaudhry said the bank was focused on bringing together innovation, trust and execution as customer expectations change, pointing to its work on digital payments, secure banking and artificial intelligence with partners.

Among its peers

Axis was one of three large private banks to report on Saturday. Kotak Institutional Equities had expected private lenders as a group to grow profit about 20% from a year earlier this quarter, with state-run banks flat. Against that yardstick Axis’s 38% was well ahead, though it still fell short of what analysts had expected for the bank itself. ICICI Bank grew profit 20.1% and HDFC Bank 4.7%.

The shares closed 0.16% higher at ₹1,290 on Friday. Investors get their first chance to trade on the numbers when markets open on Monday.