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Axis Bank Q3 net up 19% at Rs 1,604 cr
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Axis Bank, the third
largest private sector lender in the country, today said its net profit for
the quarter ended December 31, 2013 increased by 19% from a year earlier to
Rs 1,604 crore. Higher interest income, better net interest margin and lower
provisions aided the bank's earnings growth during the quarter.
"It has been a
very challenging quarter. The macro-economic environment has not been easy.
Inflation and interest rates have been staying high, restructured assets have
been going up. But we are reasonably satisfied with our results,"
Somnath Sengupta, executive director at Axis Bank, said in his post-earnings
comments.
Net interest income,
or the difference between interest income and interest expense, grew by 20%
from a year ago to Rs 2,984 crore during the three-month period. Net interest
margin improved 14 basis points, on a year-on-year basis, to 3.71% in
October-December period. Sengupta said the bank expects its net interest
margin to remain above 3.5% by the end of this financial year. Non-interest
income growth was flat, rising only two% year-on-year.
The bank pared its
provisions to Rs 202.5 crore during the quarter from Rs 386.8 crore a year
earlier. This was on account of Rs 173 crore write-backs in provisions on
investment book.
Credit quality
deteriorated a tad with gross non-performing asset ratio rising six basis
points to 1.25% while net bad loan ratio increasing five basis points to
0.42% at the end of December, 2013. The private lender restructured Rs 670
crore loans during the quarter. The cumulative value of net restructured
advances was Rs 4,900 crore or 2.06% of net customer assets. The bank expects
its restructured book to be around Rs 6,000 crore by the end of March, 2014.
Axis Bank's advances
grew 18% from a year earlier to Rs 211,467 crore at the end of the quarter.
The growth was driven by rise in domestic retail advances, which increased by
33% from a year ago. Domestic retail advances now has 30% share in the bank's
net loan portfolio compared to 27% at the end of December, 2012. Sengupta
clarified the bank had offered loans against FCNR (B) deposits, which also
contributed to the loan growth. "Without these loans credit growth would
have been around 15%," Sengupta said. The bank expects its loan growth
to be around 15% in 2013-14.
Axis Bank raised
$1.57 billion FCNR (B) deposits. But deposit growth was muted, at 7.3%
year-on-year. The bank closed the quarter with deposits of Rs 262,398 crore.
The share of low-cost current account savings account (CASA) deposits was 38%
of total deposits at the end of the quarter.
The bank's capital
adequacy ratio was 15.5% as per Basel III norms, while tier I capital
adequacy ratio was 11.5% at the end of December, 2013.
"Axis Bank's
core performance came a shade below our expectations while profit after tax
came ahead largely aided by lower provisions. Asset quality saw marginal
pressure...Bank has also allowed its provision coverage ratio to slide
sequentially, which does not bode well for the stock, in our view,&"
Saday Sinha, banking analyst, Kotak Securities said.
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