Mumbai: Axis Bank on Friday posted an over 18 percent rise in net profit at Rs 1,611 crore for the second quarter ended September 30, on the back of a healthy rise in retail loans that pushed its core interest income.
The bank, the third largest among the private sector lenders, had reported a post-tax net of Rs 1,362 crore in the corresponding period last year.
Profit growth came on the back of a healthy 20 percent rise in the core net interest income at Rs 3,524 crore, which was one of the prime drivers of profitability, bank's Executive Director and Chief Financial Officer S K Gupta told reporters here.
Growth was largely fuelled by a healthy 27 percent rise in the high margin retail loans, which pushed the overall credit growth to 20 percent, Gupta said.
"Last year, retail credit growth was 3-4 percent higher than non-retail book. This year we feel it will be faster than that," Gupta said.
The Shikha Sharma-led bank posted a 10.28 percent rise in other income during the reporting quarter at Rs 1,947 crore, while the core fee income within that component was up 11 per cent at Rs 1,590 crore.
There was a healthy 73.82 percent dip in miscellaneous income at Rs 86.22 crore as in the previous year, but this was offset by a Rs 282 crore repatriation from overseas branches.
The bank expanded its net interest margin to 3.97 percent from 3.79 percent y-o-y, on the back of a 0.07 percent rise in the yield on advances and a 0.06 percent dip in the cost of funds, largely due to increase in the proportion on the low-cost Casa deposits.
It expects to close the fiscal with an NIM of 3.50 percent, Gupta said, adding the bank also expects to maintain the credit growth momentum and is targeting a 20 percent rise and expects a deposit growth of up to 15 percent.
The average daily Casa deposits moved up by 1 percentage point to 40 percent, while the Casa ratio stood at 45 percent, up from 43 percent a year ago, Gupta said.
On the asset quality front, the bank added Rs 911 to its NPAs, while upgraded Rs 163 crore of assets and wrote off Rs 597 crore. The gross non-performing assets ratio moved up to 1.34 percent as against 1.19 percent y-o-y.
Gupta said the bank is on course on its target of restricting the NPA accretion to under Rs 6,500 crore during the fiscal and has added Rs 2,700 crore in bad assets in the first two quarters.
Some accounts in the mid-corporate segment faced difficulties, resulting in restructuring of Rs 577 crore during the quarter. Its provisions moved up to Rs 725 crore, from Rs 687 crore y-o-y and Rs 387 crore in the June quarter, but Gupta said there is nothing to be concerned about.
The bank plans to raise up to Rs 6,000 crore through a long-term infrastructure bond issue in the second half of the fiscal, using the special instrument introduced by the RBI in July, Gupta said.
The bank's scrip closed 2.04 per cent up at Rs 401.95 on the BSE. The results were announced after market hours.
