MUMBAI: Axis Bank reported a year-on-year 25 per cent growth in net profit in the quarter ended December 2017 led by demand for loans from individuals and small and medium enterprises (SMEs) and fee income even as trading income fell.

Net profit increased to Rs 726 crore or Rs 2.99 per share up from Rs 580 crore of Rs 2.41 per share a year ago, but was lower than a Bloomberg poll of 16 analysts which had expected profit to rise 41 per cent to Rs 819 crore.

The bank's stock was up more than 4 per cent after the result announcement.

The bank's net advances increased 21 per cent year-on-year, a pace faster than the banking system led by retail and SME loans which rose 29 per cent and 27 per cent respectively. Fee income rose 24 per cent to Rs 2,246 crore but other income which includes trading income dropped 24 per cent to Rs 2593 crore from Rs 3,400 crore a year earlier.

However, the bank saw a distinct slowdown in non performing assets (NPAs) with total slippages halving versus the second quarter. Net NPAs also dropped to 2.56 per cent in December 2017 from 3.12 per cent in September 2017.

"Gross NPA additions for Q3FY18 stood at Rs 4,428 crores, down from Rs 8,936 crores reported in Q2FY18. The corporate slippages stood at Rs 2,980 crores and 93 per cent of it came from low rated BB & below accounts. Net slippage (before write-offs) in retail and SME stood at Rs 599 crores and Rs 166 crores respectively," the bank said in a statement.

Axis Bank recovered a substantial amount in cash from an IT/ITES account and also upgraded one account in the steel sector. These two accounts were part of the nine accounts that were reclassified as NPA by the Bank in Q2FY18.