Mumbai: Country's third largest private sector lender Axis Bank on Tuesday reported 22 percent rise in net profit to Rs 1,347 crore on retail advances, which jumped 45 percent, as well as bigger other income during the October-December quarter.
"Going forward, our focus on the retail sector will gather more momentum as we want to take the contribution of the retail book in our overall assets to 30 percent," Executive Director, corporate centre, Somnath Sengupta told reporters on an earnings conference call here this evening.
He also sounded bullish on the overall advances growth this fiscal saying the bank will close the year above the trend growth rate.
The bank's net interest income grew 17 percent to Rs 2,495 crore, while the fee income jumped 15 percent to Rs 1,405 crore driven by a 35 percent spike in fee income from the retail business. Income from trading activities chipped in with Rs 159 crore during the quarter, Sengupta said, adding that Rs 180 crore recovery and uprgrades also helped in posting better earnings.
Total income of the bank increased to Rs 8,580.30 crore during the December quarter, from Rs 7,206.77 crore in the year-ago period.
For the first nine months of 2012-13 fiscal, the bank clocked 22 percent rise in the net profit, to Rs 3,624.28 crore, from Rs 2,964.94 crore in the same period of the previous fiscal.
The Shikha Sharma-headed bank reported a total income of Rs 24,678.96 crore in the first three quarters, compared to Rs 19,766.93 crore in the same period last financial year.
Terming the numbers as "healthy in a challenging environment", Sengupta said the bank hopes to maintain the margins at 3.50 percent or above. In the reporting quarter, the bank's NIM stood at 3.57 percent, a tad down from a year ago when it stood at 3.77 percent, but a notch higher from the second quarter when it stood at 3.47 percent.
The market lapped up the numbers and the Axis counter gained nearly 3 percent intra-day. It settled the trade at Rs 1,424.30, up 2.76 percent on the BSE, whose main gauge Sensex rose 83 points on Tuesday.
Banking analyst at Kotak Securities Saday Sinha said the earnings came "slightly ahead of our expectations", especially the net interest income which surprised positively on back of better than expected NIM (11 bps QoQ improvement, while net profit growth was further aided by lower provisions.
"Although business growth witnessed marginal moderation QoQ, it was better than the overall systemic growth. Asset quality also remained stable while addition to restructured portfolio came more or less similar to previous quarter," Sinha said.
However, Motilal Oswal Securities VP-Markets Strategy and Equities, Rikesh Parikh said Axis Bank's numbers are in line with estimate. Higher other income, lower operating expenses and provisions contributed to higher net, which was 6 percent than estimated.
On the incremental advances during the quarter, he said mortgages/home loans contributed 70 percent of the massive 45 percent spike in retail advances, followed by 11 percent each by auto and personal loans, Sengupta said.
The bank, in which the government holds nearly 24 percent, saw deposits growing 17 percent to Rs 2,44,501 crore on the back of a healthy 13 percent rise in low-cost Casa book to Rs 97,757 crore - 40 percent of its total liabilities.
Sengupta said Casa growth was driven by 22 percent or Rs 57,521 crore rise in the savings deposits and a 30 percent in retail term deposits.
During the quarter, other income rose 13 percent to Rs 1,615 crore, driven by growth in fee income which stood at Rs 1,405 crore -- up 15 percent.
The retail growth helped the bank report flat growth in the net bad loan book which stood unchanged at 0.33 percent and the gross NPAs also remained unchanged at 1.10 percent.
The bank's provisions coverage ratio rose over 81 percent in the quarter, up from 75 percent a year ago and 80 percent in the second quarter.
During the quarter, the bank set aside Rs 383 crore for bad loans, which remained stagnant a year ago, but down 22 percent sequentially from the previous quarter as the bank could get a write back on provision depreciation worth Rs 33 crore during the quarter.
Sengupta said this is despite the fact that the bank had restructured loans worth Rs 368 crore during the quarter, taking its overall recast loan book to Rs 1,320 crore.
Stable asset quality also helped Axis post healthy capital adequacy ratio which, including the net profit for the first nine months stood at 15.17 percent, with the core Tier-I capital ratio being at 10.27 percent.
When asked about possible slippages in Q4, he said slippages are unlikely to rise in the final quarter and also said there is no rising threat to asset quality form the SME sector, which most of the banks blame for their rising bad loan book.
When asked about status of the arbitration process to recover the USD 260 million it had advanced to the GMR Group for its Male airport project, which last month was taken over by the Maldives government, Sengupta did not offer a comment saying client specifics cannot be discussed.
He said, however, the bank had made provisions for its exposure to the troubled media company Deccan Chronicle group, but did not specify how much or in what percentage.