Strong growth in credit helped Axis Bank post a net profit of Rs 891 crore for the quarter ended December 31, 2010, higher by 36 per cent from Rs 656 crore in the corresponding quarter last year.
The growth in credit was across all segments, said Mr Somnath Sengupta, Executive Director and Chief Financial Officer, Axis Bank.
“Credit growth in the third quarter looks very high because last year credit growth was very low,” he said.
This fiscal the bank is looking at credit growth of about 28-30 per cent.
The Net Interest Margin, though lower from the year-ago quarter, was higher than the preceding quarter because of the daily average balances in the current and savings accounts and because of the increase in the Benchmark Prime Lending Rate and the Base Rate, said Mr Sengupta.
However, going ahead, the NIM may taper off a little because of the increase in the cost of funds. “We expect NIM to decline to around 3.3-3.4 per cent,'' he said.
Going ahead, banks may meet their rising cost of funds by increasing their current and savings accounts and would hesitate to pass on the cost of borrowing to their customers, he added.
Maintaining the share of the low cost current and savings accounts helped the bank to contain its cost of funds at 4.79 per cent (4.83 per cent).
The large and mid-corporate segment grew by 48 per cent, retail by 33 per cent and agriculture by 24 per cent. In the large corporate segment, there was credit demand from financial companies, power, telecom, metal and metal products, Mr Sengupta said.
Within non-interest income, income from trading was lower at Rs 135 crore (Rs 170 crore) due to higher yields on government securities. Miscellaneous income, which comprised recovery from written off assets, increased to Rs 45 crore (Rs 19 crore).
Shares of Axis Bank closed at Rs 1,227.55, up 2.18 per cent, from the previous close of Rs 1,201.35, on the BSE, on Monday.