Private sector lender Axis Bank matched street expectations on Wednesday with the fourth quarter net profit rising 18.3 percent year-on-year to Rs 2,180 crore. Net interest income (NII), other income, and operating profit boosted profits during the quarter while asset quality was stable.The bank’s NII grew by 20 percent to Rs 3,799 crore for the quarter ended March 2015 compared to Rs 3,165.8 crore in the year-ago period. In an interview to CNBC-TV18, Jignesh Shial of IDBI Capital Markets and Hatim Broachwala, research analyst- institutional equities, Nirmal Bang share their views on the results.
Below is the verbatim transcript of the interview.
Menaka: Numbers look better than expected?
Shial: It is a pretty decent set of numbers as I see it. Even advance growth had been pretty okay with 2,810 billion so net-net the numbers seems to be very decent than what the street was expecting.
Anuj: This net interest income (NII) growth has come as a bit of a positive surprise for the market at least has beaten the estimates. Do you think that could lead to bit of re-rating for Axis Bank considering that valuations wise they are still not among the most expensive ones?
Shial: Definitely this operational performance of the banks seems to be pretty okay as far as numbers are concerned whether it is NII or operating expenses and all. Everything seems within the range what the guidance the bank was been giving it. Even on the provisioning side, although the provision is little higher year-on-year (YoY) or even on the quarterly basis but there has been pretty much hype that numbers would be too bad for this quarter, but it doesn’t look like the way the street was expecting that bad numbers are here.
Menaka: Were you expecting an improvement on the asset quality basis, so therefore are you disappointed that it is stable or are you happy that it is stable?
Broachwala: I am happy that it is stable.
Menaka: Anything else that you are picking up in the numbers that you would like to highlight for our viewers?
Broachwala: Profit numbers are above our expectations mainly because it seems treasury we don’t know the break-up, but the other income has been higher.
Menaka: Yes, at Rs 2,687 crore versus Rs 2,213 year-on-year (YoY).
Broachwala: Yes, even provisions are slightly higher than expectations.
Menaka: Do you have the provisions number?
Broachwala: Rs 710 crore is the provisions number.
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