Axis Bank Q2 Results: Profit Rises 10%

Axis Bank Ltd.'s profit increased 10% year-on-year in the July-September quarter on higher core income, in line with analysts' estimates. However, higher provisions during the quarter affected net profit.

The private sector lender's net profit rose to Rs 5,864 crore, as compared with Rs 5,330 crore a year ago, according to an exchange filing. Analysts polled by Bloomberg estimated a net profit of Rs 5,754 crore for the second quarter.

Net interest income grew 19% year-on-year to Rs 12,315 crore. Other income for the quarter rose 31% from a year ago to Rs 5,034 crore. Net interest margin for the quarter was flat at 4.11%.

Asset quality for the lender improved, after gross non-performing asset ratio fell by 23 basis points quarter-on-quarter to 1.73%. Similarly, net NPA ratio as of Sept. 30 fell to 0.36%, as compared with 0.41% as of June 30.

Fresh additions to bad loans during the quarter fell to Rs 3,254 crore, down from Rs 3,990 crore in the April-June quarter. Upgrades and recoveries were lower at Rs 1,985 crore, as compared with Rs 2,305 crore sequentially.

Write-offs during the July-September period rose to Rs 2,671 crore, as compared with Rs 2,131 crore in the April-June quarter, a rise of 25%.

Provisions for the three-month period rose to Rs 814 crore, up 48% year-on-year.

Net advances for the year increased 23% from a year ago to Rs 8.97 lakh crore. Domestic advances were up 26%, where the retail loan book rose by 23%, small and medium enterprises lending was up 27% and corporate loans increased 21%.

While addressing reporters after announcing the quarterly results, Amitabh Chaudhry, managing director and chief executive officer at Axis Bank, said that the lender is not seeing any rise in risk in its unsecured lending portfolio.

"We continue to grow our personal loan portfolio within risk guard rails. Nothing in the book is indicating a rise in risk. We continue to watch for any risks emanating in the economy," Chaudhry said.

Unsecured personal loans rose 25% year-on-year to Rs 61,168 crore, while outstanding credit card loans was up 72% to Rs 35,848 crore. The sharp rise in credit card loans was owing to the Citi card portfolio acquisition which was concluded in March.

While delinquencies are rising in the sub-Rs 50,000 loan category for unsecured loans, Axis Bank has continued to remain out of it, according to Sumit Bali, group executive and head-retail lending.

Total deposits rose 18% from a year ago to Rs 9.55 lakh crore. Low cost current account savings account deposits, as a ratio of total deposits, were at 44% as of Sept. 30 as against 46% last year.