Axis Bank Q1 Net up over 18% at Rs 1,667 crore

Private sector Axis Bank Tuesday reported 18.3 percent growth in net profit at Rs 1,667 crore for the first quarter ended June 2014.

PTI| Last Updated: Jul 22, 2014, 22:03 PM IST

Mumbai: Axis Bank, country's third largest private lender, Tuesday reported 18 percent growth in profit after tax at Rs 1,667 crore on drop in provisions which nearly halved during the three months to June.

The bank had earned a net profit of Rs 1,409 crore in the first quarter of 2013-14.

The city-based bank's provisions nearly halved to Rs 386.60 crore in the reporting quarter from Rs 712.25 crore in the same period last year.

This is despite the fact that the bank saw its gross NPAs rising to 1.34 percent from 1.10 percent, and net NPAs to 0.44 percent during the reporting quarter from 0.35 percent a year ago.

Explaining the reasons for lower provisions, Axis Bank's Executive Director Somnath Sengupta said, "Our total provisions came down due to the depreciation on investment, which was much higher in the year-ago period when we had provided Rs 120 crore and we have got a write back of Rs 15 crore on the mark-to-market loss on the wholesale book this year."

Addressing the media in a post-earnings conference call, he said the bank also had some reduction in NPA provisions which also resulted in drop in overall provisions.

Net interest income (NII), which is the interest it earned on advances during the period, rose 16 percent to Rs 3,310 crore from Rs 2,865 crore in the year-ago quarter.

Net interest margin, the spread between what it pays on deposits and what it earns from on-lending, remained stable at 3.88 percent in the period against 3.86 percent last year. He said the bank expects NIM to be above 3.5 percent going forward.

Unlike its peers and the state-run banks, Axis Bank did not sell any bad loans to asset reconstruction companies in the quarter, he said.

Gross slippages stood at Rs 626 crore and the bank restructured Rs 480 crore worth loans in the quarter, taking its total CDR book to Rs 6,289 crore.

Recoveries and upgrades were Rs 97 crore and write-offs were Rs 212 crore. The bank provision coverage was 77 percent, which included prudential write-offs. Sengupta said the total provision for unhedged forex exposure in the quarter was Rs 48 crore.

Bank's other income, comprising fee, trading profit and miscellaneous incomes, dropped around 5 percent to Rs 1,691 crore from Rs 1,781 crore a year ago.

"The drop in the other income is really reflective of the slowdown on the corporate business in the system as a whole. Therefore, fee income, which we normally get from loan processing fees or debt syndication, has been much slower," Sengupta said.

Fee income in the quarter grew 5 percent to Rs 1,378 crore mainly on account of retail banking which grew 22 percent.

The bank's shares closed at Rs 2,017.60 apiece, down 0.27 percent on the BSE today.

Commenting on the results, Rahul Shah of Motilal Oswal Securities said, "Axis Bank results are broadly in line with expectations. They reported net profit of Rs 1,667 crore versus our estimates of Rs 1,657 crore.

"Over the past three quarters, profitability of the bank was helped by repatriation of profits from international subsidiaries which could further aid earnings."

The bank's balance sheet grew 14 percent at Rs 3,79,361 crore as of June 30. Advances rose 16 percent to Rs 2,30,535 crore.

During the quarter, the bank re-organised the agriculture lending business by merging the retail portion of agriculture advances with the existing retail advances. The non-retail agriculture advances were merged into the SME business.

After this change, the outstanding retail advances, including retail agriculture, stood at Rs 91,223 crore as against Rs 67,624 crore in the year ago quarter.

The bank's capital adequacy ratio under Basel III was 15.53 percent (excluding the net profit for Q1 of FY15) with tier-I at 12.08 percent (excluding net income of Q1 of FY15).