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Our Bureau

Mumbai, Jan. 9 Axis Bank reported a net profit of 63 per cent at Rs 501 crore for the quarter ended December 31, 2009, against Rs 307 crore in the corresponding quarter last year.

This is the sixth quarter in a row that the bank has posted a net profit of over 60 per cent, said Dr P.J. Nayak, Chairman and CEO.

Analysts had predicted a growth of 30-35 per cent in net profit for the bank. The growth in profits is backed by strong business momentum, growth in asset size and strong fee income, Dr Nayak said.

However, he also said that the third quarter was a tough quarter because of the tight liquidity conditions and rising interest rates. As a result, the bank saw a rise in cost of funds to 6.91 per cent (5.72 per cento) and Net Interest Margin falling to 3.12 per cent (3.91 per cent).

“The NIM and cost of fund will re-equilibrate this quarter with interest rates going down,” Dr Nayak said.

The bank is targeting NIM in the range of 3.25- 3.5 per cent, this fiscal.

Good profits in treasury income helped the bank to write back Rs 147 crore provisions on its investment portfolio. Trading income rose to Rs 114 crore, up by 35 per cent from Rs 84 crore. The share of low-cost CASA deposits (current account and savings accounts) declined to 38 per cent of total deposits, against 45 per cent last year.

While credit growth was robust at 55 per cent in the third quarter, it may slow down in this fiscal, Dr Nayak said. However, with RBI infusing liquidity, the impact may not be much, he added.

The growth in retail credit has been slower than corporate credit, on account of the changing business cycle, Dr Nayak said. The share of retail assets to total assets declined marginally to 21 per cent from 25 per cent last year.

Despite the slump in capital markets, the fee income from capital markets increased by 204 per cent to Rs 304 crore (Rs 100 crore). The bank has appointed a CEO for its mutual funds and will start operations soon, Dr Nayak said.

In the two forex derivative cases against Axis Bank, the judgement has been in favour of the bank, Dr Nayak said. In both cases, the companies have gone in for further appeal.

On Friday, shares of Axis Bank closed at Rs 485.75 on the BSE, down 6.97 per cent from the previous close of Rs 522.15.

More Stories on : Private Banks | Financial Performance | Private Banks

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