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Corporate Jul 18, 2013

Axis Bank Q1 net profit up 22% on high trading gains

Mumbai: A nearly 200 percent jump in trading income, higher retail advances and a rise in margins helped Axis Bank to report today a 22 percent increase in net profit to Rs 1,409 crore in the June quarter.

The trading income was up by 193 percent at Rs 440 crore, while interest income rose 31 percent to Rs 2,865 crore.

The good set of numbers was also aided by retail advance, which grew 39.7 percent to Rs 56,706 crore. Core net interest margin also rose to 3.84 percent from 3.37 percent, Axis Bank executive director Somnath Sengupta told reporters on a post-earnings concall in Mumbai today evening.

Making profits PTI.

Making profits PTI.

A near 40 percent rise in retail advances helped the bank grow its interest income by more than 31 percent during the quarter under review.

Another reason for the better numbers was drop in cost of funds, which came down to 6.26 percent from 6.70 percent in the year-ago period, Sengupta said.

Other income, which comprises fee, trading profit and miscellaneous income, was up 33 percent year-on-year. Provisions more than doubled from a year ago to Rs 712 crore as asset quality deteriorated in the current uncertain economic environment.

Sengupta said the bank provided Rs 712 crore in provisions during Q1, up from Rs 259 crore Y-o-Y, as gross NPAs nearly doubled to Rs 572 crore from Rs 261 crore, while there was a Rs 120 crore for depreciation of investments.

During the April-June period, the lender added Rs 681 crore in fresh slippages, which was about Rs 400 crore a year ago. However, he said NPAs are line with the past few quarters and he does not see any major changes in this at least in the next two quarters.

The markets lapped up the numbers and Axis Bank shares rose 3.8 percent to Rs 1,238.40 on the BSE after climbing more than 4 percent, while the Sensex rose 0.90 percent.

On the sustainability of the higher NIM, Sengupta said it is unlikely due to the challenging market conditions and may settle around 3.25-3.5 per cent range going forward.

Overall loans grew 16 percent - 39.9 percent on the retail front and under 10 percent on the corporate lending front. Total retail loan book constitutes 29 percent of the total asset book, Sengupta said.

On the deposit front, he said the Casa book did well during the quarter and grew 16 percent, constituting 42 percent of the total liabilities. Of this, savings deposits grew 20 percent while current account deposits expanded 11 percent.

On loan restructuring, he said its CDR book rose to Rs 686 crore, taking the total recast loan book to Rs 4,211 crore.

During the quarter, the bank upgraded/recovered loans worthy Rs 72 crore.

On Cobrapost expose issue, Sengupta said the bank has not suspended anyone implicated in the sting but took internal action like issuing warnings and withholding increments/incentives.

Axis Bank's net NPAs rose marginally to 0.35 percent from 0.31 percent year ago, while gross NPAs rose to 1.10 percent from 1.06 percent. Total income shot up to Rs 9,059.12 crore in the quarter under review from Rs 7,818 crore in the corresponding period of last fiscal.

The capital adequacy ratio stood at 16.3 percent.

Axis Bank has significant exposure to troubled infrastructure projects as well as mid-size companies facing cash-flow problems.


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