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Axis Bank reported a 25 per cent year-on-year (y-o-y) increase in third quarter net profit as robust upgradation and recovery in loan accounts alleviated provisioning pressure.
India’s third-largest private sector bank reported a net profit of ₹726 crore in the quarter ended December 31, 2017, against ₹580 crore in the year-ago quarter.
Though the operating profit declined 17 per cent to ₹3,854 crore, the bottomline was supported by the relatively lower loan-loss provisioning of ₹2,754 crore (₹3,576 crore in the year-ago period).
Net interest income (difference between interest earned and interest expended) grew 9 per cent to ₹4,732 crore (₹4,334 crore).
Other income (comprising fee, trading profit and miscellaneous income) declined 24 per cent to ₹2,593 crore (₹3,400 crore).
The decline in other income is solely due to a sharp dip in trading income to ₹200 crore (₹1,525 crore in the year-ago period).
The other two components of other income — fee income was up 24 per cent to ₹2,246 crore and miscellaneous income jumped 110 per cent to ₹147 crore — showed a healthy growth.
Powered by robust growth in retail (29 per cent) and SME loans (27 per cent), overall advances increased 11 per cent to ₹4,20,923 crore. Corporate credit grew 12 per cent.
Loan pick-up was visible across lending segments, said Jairam Sridharan, Group Executive and Chief Financial Officer. He also attributed this to strong base effect as loan growth was muted in the year-ago period (due to demonetisation). Going ahead, he expects loan growth to moderate.
Total deposits were up 10 per cent y-o-y to ₹4,08,967 crore. The proportion of low-cost current account, savings account (CASA) deposits in total deposits improved to 49 per cent as at December-end 2017 from 48 per cent as at December-end 2016.
Fresh slippages in the reporting quarter moderated to ₹4,428 crore against ₹8,936 crore in the preceding quarter.
Upgradations and recoveries in loan accounts were substantially higher at ₹4,008 crore (₹1,048 crore in the preceding quarter). Due to this, the loan-loss provision stood lower at ₹2,754 crore (₹3,576 crore in the year-ago quarter).
During the reporting quarter, the bank recovered substantial amount in cash from an IT/ITeS account and also upgraded one account in the steel sector.
On the bad loans front, Jairam said the conversation is shifting from non-performing assets (NPA) recognition to their resolution.
As at December-end 2017, gross non-performing assets (GNPAs) came off to 5.28 per cent of customer assets from 5.90 per cent as at September-end 2017.
GNPAs in absolute terms were lower at ₹25,000 crore against ₹27,402 crore as at December-end 2016.
Axis Bank shares closed at ₹611.05 apiece, up 3.52 per cent over the previous close on the BSE.
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