The Hindu Business Line : All-round growth drives Axis Bank Q2 net up 77%

Hyderabad, Oct. 13 At a time when every bank is looking at the others with suspicion, in the backdrop of the liquidity crunch and global financial crises, Axis Bank flagged off this results season with an impressive performance on all parameters.

Its net profit increased 77 per cent to Rs 402.9 crore in the second quarter of current financial year ended September 30, compared with Rs 227.8 crore in the corresponding quarter of last fiscal.

Does the performance of Axis Bank send a signal about other banks also?

Perhaps not.

Dr P.J. Nayak, Chairman and Managing Director of Axis Bank, doesn’t think that there would be many other banks that have a similar story to share.

“It’s a fact that we did exceedingly well. But the industry health can only be grasped after the results of other banks are also out,” he told Business Line over phone from Hong Kong.

“The strong performance was driven by all-round growth, especially in deposits, advances, net interest income and fee-based income,” he said.

“The growth in demand/current accounts and savings accounts helped the bank to bridle the increase in cost of funds just 12 basis points, while this could be very high for some others in the industry,” he said.

Dip in trading income

However, a 42-per cent dip in trading income at Rs 36 crore and a sequential increase of Rs 70 crore in the non-performing assets stand out in an otherwise all-round growth story.

“The dip in trading income was due to the downward trend in the markets and non-core nature of business. Growth in NPAs is a natural adjunct to growth in balance sheet. What you must see is the decrease in net NPAs (as per cent of net customer assets) to 0.43 per cent from 0.55 per cent,” Dr Nayak said.

Pressing ahead

While refusing to give an outlook for fiscal 2009, he said the bank would press ahead with its tested business model, which has been yielding results.

On the likely adverse impact of sub-prime crisis on Axis Bank in particular and industry in general, Dr Nayak said the bank had no exposure to sub-prime or CDO assets abroad. There may not be any serious problem for the industry as the “Indian banks are fairly strong”.

The bank would go ahead with other plans such as setting up of an asset management company as previously announced, he added.

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Axis Bank Q1: Strong show in interest income
Higher income lifts Axis Bank Q1 net 89%

More Stories on : Financial Performance | Private Banks

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