Axis Bank surprises St with 21% rise in profit but bad loans rise

The country’sthird largest private sector lender Axis Bank surprised Dalal Street with a higher than expected 21.2 percent surge in net profit despitedeterioration of asset quality.

Axis Bank posted a 21 percent jump in net profit to Rs 1,362.3 crore from Rs 1,123.5 crore in the same quarter last fiscal, sending its shares 2 percent higher on the bourses.

The rise in net profit was boosted by other income.

The net interest income (the difference between interest earned and interest expended) rose 26.2 percent to Rs 2,937 crore during July-September quarter from Rs 2,327 crore in a year ago period, ahead of analysts’ forecast.

[caption id=“attachment_663736” align=“alignleft” width=“380”] Axis Bank beats estimates. PTI.[/caption]

According to a CNBC-TV18 poll, analysts on an average had expected the bank to report net profit of Rs 1,243 crore and net interest income of Rs 2,830 crore for the quarter.

However, the bank’s bad loans or non performing assets rose during the quarter.

Gross non-performing assets (NPA) rose to 1.19% of total loans compared with 1.1% in the year-ago quarter. Provisions rose 35% to Rs.687.49 crore. Post-provisions, net NPA rose to 0.37% from 0.33% in the year-ago quarter.

Gross NPAs jumped 10 percent sequentially to Rs 2,734.5 crore and net NPAs rose 6 percent Q-o-Q to Rs 838.3 crore during the September quarter.

Provisions and contingencies declined 3.5 percent sequentially (up 35 percent on yearly basis) to Rs 687.5 crore while capital adequacy ratio (as per Basel III norms) stood at 15.85 percent during September quarter as against 15.87 percent in June quarter.

Other income rose nearly 11 percent year-on-year to Rs 1,766.09 crore, “which included gain of Rs 281.62 crore on repatriation of accumulated profits of overseas operations and a loss of Rs 114.25 crore on transfer of government securities,” the bank said in its press release.

Advances of the bank increased to Rs 2.01 lakh crore from 1.72 lakh crore while deposits grew from 2.36 lakh crore to 2.55 lakh crore year-on-year.

Here are the highlights:

• Savings Bank Deposits grow 18% YOY

• Domestic CASA and Retail Term Deposits constitute 73% of Total Domestic Deposits

• Daily Average CASA for Q2FY14 constitute 39% of Total Deposits

• Retail Advances grew 37% YOY and account for 30% of net advances

• NII for Q2FY14 rose 26% YOY to Rs 2,937 crore from Rs 2,327 crores in Q2FY13.

• The Bank recorded a Net Interest Margin of 3.79% in Q24 as against 3.46% in in the year-ago period

• The Bank’s Balance Sheet grew 16% YOY and stood at Rs3,51,363 crore at the end of September 30, 2013

• SME segment too recorded a growth of 29% YOY and stood at Rs30,415 crore at the end of Sep 30.