Private sector lender Axis Bank reported a 25% year-on-year growth in net profit to ₹726.4 crore in the quarter ended December 31, mainly due to a lower base and reduced provisions for bad loans. In the corresponding period of the previous fiscal, the lender had reported a whopping 73% decline in net profit to ₹580 crore due to increased provisioning.
While the bank reported 9% growth in net interest income to ₹4,732 crore, non-interest income fell 24% to ₹2,593 crore as trading gains declined to about ₹200 crore from ₹1,595 crore.
“In a declining rate environment you have a lot more ability to book trading gains,” Jairam Sridharan, CFO, Axis Bank, told The Hindu. “But in Q3 this time, you saw an environment where the g-sec [government security] yields went up by about 70 basis points. This was anticipated,” he added.
The lender reported a bad loan provision of ₹2,811 crore as compared with ₹3,796.
‘Slippages to stabilise’
Asset quality improved sequentially with fresh slippages falling by about 50%. “We had, for a few quarters, slippages in the ₹4,000 crore range,” he said.
“Last quarter, because of the RBI report on divergence, slippages went up to ₹8,800 crore. We are back to the ₹4,000 crore to ₹4,500 crore kind of range. I do not expect an increase in that number going forward,” Mr. Sridharan said.
The gross NPA ratio of the bank at the end of December was 5.28% compared with 5.9% in the previous quarter and 5.22% a year earlier.
The bank’s net interest margin also fell 5 basis points last quarter to 3.38%.
“We are starting to believe that margins have bottomed out. Next quarter [Jan-Mar], either you should see stability or improvement,” he said.
