Axis Bank: See no asset stress, NIM at 3.25-3.50 in FY13

Even though its non-performing assets rose quarter-on-quarter basis, Axis Bank does not see any stress on asset quality in the rest of the financial year, 2012-13. The bank plans to grow its loan book a little above than the industry average currently at 16.50% year-on-year.

"We are looking at a net interest margin in the range of 3.25-3.50% in FY13," Somnath Sengupta, ED & CFO - Axis Bank told reporters at a media teleconference.

"We do not see any pressure on asset quality. We should be able to maintain asset quality. However, there will be some restructuring cases. We expect the gross NPA ratio at 1% and net NPA ratio at 0.31%.  Our cost of funds fell by 25 basis points to 6.7% during the three months period," he said.

In April-June quarter, the share of retail loans went up by 200 bps to 24% of total advances. Axis Bank’s loan book grew nearly 30% to Rs 1.71 lakh crore. Infrastructure sector, retail credit and agricultural loans contributed to such growth.  Its share of SME credit decreased from 15% to around 13%. Market participants were a bit anxious over its loan exposure to small and medium enterprises, the category most vulnerable in a slowing economy.

"It was not a conscious decision to bring down the SME lending exposure. The repayments were higher while disbursals were less. This along with the increased share of retail loans resulted in reduction of SME credit. We have lend to SMEs as a part of SME lending," Sengupta said while replying to a moneycontrol.com’s query.

Meanwhile, the bank’s shareholders and unsecured creditors approved the scheme of agreement in respect of the demerger of the financial services business from Enam Securities to the bank and simultaneious sale of such businesses to Axis Sales and Securities, a wholly owned subsidiary of the bank.

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saikat.das@network18online.com