Axis Bank on October 20 reported healthy second-quarter earnings with double-digit growth in the bottom line on strong growth in net interest income and improvement in asset quality.
Here are the top five takeaways from the private lender's Q2FY23 earnings:
The profit growth was higher than estimates. Analysts were expecting a 45 percent increase in net profit for the fiscal second quarter.
Analysts were expecting the bank’s net profit for Q2FY23 at Rs 4,561 crore on the back of a 25 percent increase in net interest income.
Net interest income (NII), or the difference between interest earned and interest expended, rose nearly 31 percent year-on-year to Rs 10,360 crore in the reporting quarter from Rs 7,901 crore last year.
2. Improved asset quality
The asset quality of the lender improved during the second quarter of the financial year 2022-23. Gross non-performing assets (NPAs) were at 2.50 percent of gross advances as on September 30, 2022, which declined by 103 basis points on-year and 26 bps on-quarter. Net non-performing assets were at 0.51 percent of net advances as on September 30, 2022, a drop of 57 bps on-year and 13 bps on-quarter.
Specific loan loss provisions for Q2FY23 declined by 19 percent year-on-year to Rs 751 crore from Rs 927 crore in the previous quarter last year.
As on September 30, 2022, the Bank’s provision coverage, as a proportion of Gross NPAs stood at 80 percent, as compared to 70 percent as at September 30, 2021 and 77 percent as at June 30, 2022.
3. Net Interest Income and Net Interest Margin
The Bank’s Net Interest Income (NII) grew 31 percent on-year to Rs 10,360 crore, up from Rs 7,900 crore in the corresponding quarter last year. Net interest income rose 10 percent on-quarter.
Net interest margin (NIM) for Q2FY23 stood at 3.96 percent, up 57 basis points year-on-year and 36 basis points on-quarter.
4. Higher Other Income
Fee income for the reporting quarter grew 20 percent on-year and 8 percent on-quarter to Rs 3,862 crore. Retail fees grew 28 percent on-year, and constituted 68 percent of the Bank’s total fee income.
Retail Assets (excluding cards and payments) fee grew 29 percent on-year. Retail cards and payments fee grew 53 percent on-year. The Corporate & Commercial banking fees together grew 5 percent on-year.
5. Strong growth in advances
Axis Bank's net advances grew 18 percent year-on-year and 4 percent quarter-on-quarter to Rs 7,30,875 crore as on September 30 2022.
Domestic net loans grew 20 percent year-on-year and 4 percent on-quarter. The advances growth was 19 percent on-year and 5 percent on-quarter.
Retail loans grew 22 percent on-year and 3 percent on-quarter to Rs 4,23,235 crore and accounted for 58 percent of the net advances of the Bank.
The share of secured retail loans was 79 percent, with home loans comprising 35 percent of the retail book. Home loans grew 13 percent on-year, Small Business Banking (SBB) grew 69 percent on-year and 12 percent on-quarter; and rural loan portfolio grew 46 percent on-year.
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