Net interest income, the difference between interest earned and interest expended, grew by 9.2 percent to Rs 4,731.52 crore compared to Rs 4,333.73 crore in year-ago.
Country's third largest private sector lender Axis Bank's third quarter earnings beat analyst expectations, with improvement in asset quality performance.
Profit during the quarter grew by 25.3 percent year-on-year to Rs 726.4 crore despite fall in other income & operating income, driven by lower provisions and higher net interest income.
Net interest income, the difference between interest earned and interest expended, grew by 9.2 percent to Rs 4,731.52 crore compared to Rs 4,333.73 crore in year-ago, with strong loan growth at 21 percent YoY.
"Retail and SME loan book grew 29 percent and 27 percent YOY, respectively while corporate loan growth improved to 12 percent YoY led by working capital up 49 percent," the bank said.
Deposits growth was 10 percent during the quarter with CASA (on a cumulative daily average basis) growth of 21 percent YOY, in which savings bank deposits and current account deposits grew by 18 percent and 26 percent YoY, respectively, it added.
Asset quality improved during the quarter as gross non-performing assets (as a percentage of gross advances) declined to 5.28 percent from 5.90 percent in previous quarter and net NPAs were lower at 2.56 percent from 3.12 percent QoQ.
In absolute terms also, gross NPAs dropped 8.8 percent sequentially to Rs 25,000 crore and net NPAs declined 16.2 percent to Rs 11,769 crore for December quarter, following lower slippages
The bank said slippages declined 50 percent sequentially, with corporate slippages at Rs 2,980 crore and net slippage (before write-offs) in retail and SME at Rs 599 crore and Rs 166 crore, respectively.
During Q3FY18, the bank recovered substantial amount in cash from an IT/ITES account and also upgraded one account in the steel sector. These two accounts were part of the nine accounts that were reclassified as NPA by the bank in Q2FY18.
Axis Bank said total loan amount outstanding against the IBC (Insolvency and Bankruptcy Code) accounts mentioned in the two lists referred by RBI has declined by 14 percent compared to the amount outstanding as on September 2017. The outstanding under these accounts stood at Rs 6,074 crore at the end of December 2017.
The loans outstanding on watch list declined 12 percent over the previous quarter and stood at Rs 5,309 crore, it added.
Provisions for bad loans dropped sharply 26 percent year-on-year and 10.5 percent sequentially to Rs 2,811 crore in quarter ended December 2017.
Provision coverage ratio improved to 66 percent at the end of December quarter, from 60 percent in previous quarter. The bank expects to maintain provision coverage ratio in 60-65 percent range.
Numbers were ahead of estimates. Profit for the quarter was estimated at Rs 706.2 crore and net interest income at Rs 4,498.5 crore, according to average of estimates of analysts polled by CNBC-TV18.
Other income or non-interest income in Q3 reported at Rs 2,593 crore fell sharply by 23.7 percent compared to year-ago and operating profit at Rs 3,853.80 crore slipped 17 percent YoY.
However, the bank said its core operating profit (excluding trading profit) increased 17 percent year-on-year to Rs 3,654 crore and core operating revenue rose 15 percent to Rs 7,125 crore in Q3.At 14:02 hours IST, the stock price was quoting at Rs 612.90, up Rs 22.65, or 3.84 percent on the BSE.