Driven by growth in net interest and fees income, private sector lender Axis Bank on Friday posted a net profit of R1,102.2 crore, up 23.6% year-on-year in the quarter ended December, 2011, surpassing analysts’ expectations. The Axis Bank stock closed at R1,008, up 5.90% on the Bombay Stock Exchange.
Total income during the three months to December 2011, was R7,206.7 crore, an increase of 44.5% y-o-y driven by net interest income which rose 23.49% y-o-y to R2,140.3 crore as also strong fee income.
?The growth in fee income is broad based across retail, corporate, transaction and investment segments. We have seen individual components grow in the reporting quarter”, said Somnath Sengupta, ED & CFO, Axis Bank.
The bank’s net interest margin (NIM) was 3.75%, down three basis points sequentially. ?We are expecting some kind of contraction in the NIM and want to maintain between 3.32% and 3.50% in the next 12 months,? Sengupta said, adding that the bank’s cost of funds may also go up. The cost of fund rose 15 bps sequentially to 6.34%.
Other income increased by 24.5% y-o-y to R1,429.8 crore, primarily contributed by fees income of R1,222.5crore, up 26.3% y-o-y.
The bank?s asset quality remained healthy with non-performing loans (npl) at 0.39%, up 5 bps sequentially. Axis Bank has a coverage ratio of 75.28%.
During the quarter, the bank added R535 crore to gross npas. ?Our retail lending has seen a 32% y-o-y growth while lending to corporates was up 17% y-o-y,” said Sengupta.
He added that the bank had not really tapped the retail space and so it continue to focus on individual loans.
Sengupta observed that migration from cheaper current and savings accounts (Casa) to term deposits had not been significant but felt there could be some migration if the term deposit rates continued to be high.
Nevertheless, the bank had managed to maintain a Casa ratio of 42%, out of which savings bank deposits grew 21% y-o-y.
The bank’s advances grew by 20% y-o-y to R1,23, 533 crore with retail loans accounting for 32%.
The bank?s total Capital Adequacy Ratio (CAR) was at 13.11% while Tier-I CAR was 9.58%.
