Axis Bank Q2 net up 25% at Rs 920 cr on higher NII

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Moneycontrol Bureau

Axis Bank 's second quarter (July-September) net profit rose more than 25% year-on-year to Rs 920 crore. This is on the back of a robust growth in net interest income-the difference between interest earned and interest expended-climbed 24% to Rs 2,007 crore, driven by a forecast-beating loan book growth.

A CNBC-TV18 poll expected a muted loan book growth with NII growing at 12% and net profit at 27%.

"The second quarter results showed a balance growth in all segments," said Somnath Sengupta, ED and CFO of the bank in a post earnings conference call.

"We will continue to put more focus on retail lending. Our yield on advances have gone up from 10.2% from 10.50% quarter-on-quarter. Our loan book growth for the entire fiscal will be higher than the industry average," he added.

While the loan book expanded nearly 27% YoY to Rs 1.41 lakh crore in Q2FY12, deposits grew by 26% YoY to Rs 82,140 crore. Net interest margin improved to 3.78% as against 3.28% in April-June quarter. This suggests that the bank has successfully passed on the repeated policy rate hikes (by RBI) to its customers.

Moreover, the bank increased the share of current account and savings account (CASA) to its total deposits. Its CASA ratio stood at 42% compared with 40.53% in the previous quarter. This has helped the bank to reduce its cost of deposits as CASA is always a cheap source of funds offering only 0-4% rate of interest.

"The sequential uptick in NIM during Q2FY12 was driven by stronger build-up in CASA deposits, stable funding rates and a pick-up in loan yields," the bank said in a statement.

During the quarter, India's third largest private sector lender has seen marginal deterioration in its asset quality. Net non-performing assets (NPAs) crawled up from 0.31% to 0.34% quarter-on-quarter while gross NPAs rose from 1.06% to 1.08% in the same period.

"The increase in provisioning is due to rise in NPAs. Our provisioning coverage ratio stood at 78%, much above the mandatory 70% mark," Sengupta said.

Meanwhile, fee income too added to the bank's bottomline by growing 32% YoY to Rs 1,121 crore. Other income moved up to Rs 1,235 crore from Rs 1,033 crore.

Capital adequacy ratio stood at 11.35% versus 13.68% YoY, leaving a room for the lender to raise fresh capital.

Results at a glance:

(Rs in crore)

	Q2, FY12	Q2, FY11	Q1, FY12
Net Profit	920	735	942
NII	2007	1615	1724
Loans	1,40,089	1,10,588	1,32,000
Deposits	1,94,455	1,56,887	1,84,00

 

 

 

 

Loan book break-up:

Large and mid corporates	71.19%
SME	10.12%
Agriculture including micro finance	13.74%
Capital markets	4.95%

 

 

 

 

Saikat Das
saikat.das@network18online.com