Axis Bank posted a net profit of ₹5,797 crore for Q1 FY24, up 41 per cent yoy led by 38 per cent increase in operating revenue and strong net interest income (NII) growth.

Net interest income (NII) was up 27 per cent yoy and 2 per cent qoq to ₹11,959 crore. Net interest margin (NIM) for the quarter was at 4.10 per cent, up 50 bps yoy.

In the earnings call, CFO Puneet Sharma said that the cost of funds have gone up by over 30 bps on year but rates on non-retail term deposits have plateaued and are expected to stabilise at the current levels. While bulk of the deposit repricing has happened in Q4 FY243 and Q1 FY24, cost of deposit is likely to go up in the coming quarters even as the pace of the increase is seen moderating.

Deposits of the bank were up 17 per cent y-o-y at ₹9.4 lakh crore led by 22 per cent growth in saving account deposits, 23 per cent in current account and 13 per cent in term deposits. The CASA ratio was at 46 per cent, up 182 bps on year.

A growth of 74 per cent y-o-y and 6 per cent q-o-q in the non-interest income, comprising of fee, trading profit and miscellaneous income, to ₹5,087 crore for Q1 also supported the bottomline.

Advances, loans up

Total advances grew 22 per cent y-o-y and 2 per cent q-o-q to ₹8.6-lakh crore led by 26 per cent growth in domestic advances. Retail loans grew 21 per cent y-o-y, SME loans 24 per cent and corporate loans by 25 per cent. Rural loans were up 22 per cent, small business banking loans up 46 per cent and mid-corporate loans up 38 per cent

Sharma said that the corporate loan pipeline has been picking up and was much stronger than the corresponding period of the previous year, adding that demand continues to be broad-based led by sectors such as retail, telecom, NBFCs and road projects..

Retail loans at ₹5.0 lakh crore, accounted for 58 per cent of the total book. The share of secured loans within retail was 77 per cent, and home loans was 32 per cent. Home loans grew 8 per cent, personal loans 21 per cent and credit cards by 91 per cent.

The bank said that it continues to grow the unsecured portfolio with the aim of eventually growing the share of unsecured loans to 25 per cent.

The bank issued 11.1 lakh cards credit cards in Q1, with a cards-in-force market share of 14 per cent as of June 2023. Card spends were up 78 per cent y-o-y and 28 per cent q-o-q led by 100 per cent y-o-y increase and 33 per cent q-o-q increase in retail spends.

Net slippages for the quarter were at Rs 1,131 crore but retail net slippages were higher at Rs 1,639 crore. Recoveries from written off accounts stood at Rs 554 crore. Loan recoveries and upgrades were at Rs 2,305 crore whereas the bank wrote-off loans worth Rs 2,131 crore.

Gross NPA ratio of the bank declined by 80 bps yoy and 6 bps qoq to 1.96 per cent as of Jun 30. The net NPA ratio improved 23 bps yoy and 2 bps qoq to 0.41 per cent.