Axis Bank reported strong financial results for the second quarter of FY2024, with a net profit of ₹6,918 crore, marking an 18% year-on-year (YoY) increase, surpassing Bloomberg’s estimate of ₹6,370 crore, according to the bank’s exchange filing. Sequentially, the net profit rose 15%. This performance came despite a sharp rise in provisions and contingencies, which surged to ₹2,204 crore from ₹815 crore a year ago and ₹2,039 crore in the previous quarter.
The private lender’s asset quality improved, with its gross non-performing assets (NPA) ratio dropping to 1.44% as of September 30, 2024, compared to 1.54% in the previous quarter. The net NPA ratio remained stable at 0.34% quarter-on-quarter (QoQ).
Key Highlights:
- Net Interest Income (NII): The bank’s net interest income grew 9% YoY to ₹13,483 crore, contributing to the profit increase.
- Gross NPA: The gross NPA ratio fell to 1.44% from 1.54% QoQ, while net NPA stayed at 0.34%.
- Total Advances: Axis Bank’s total advances rose 11% YoY to ₹9.99 lakh crore, with retail loans growing 15% YoY to ₹5.98 lakh crore, making up 60% of net advances.
- Loan Portfolio: Secured retail loans accounted for 71% of the retail loan book, with home loans comprising 28%. Home loans grew 5% YoY to ₹1.68 lakh crore, while auto loans increased 6% to ₹58,708 crore. Unsecured personal loans surged 23% to ₹75,444 crore, and the credit card portfolio rose 22% to ₹43,735 crore.
- Corporate Lending: The corporate loan book expanded by 6%, with the mid-corporate segment seeing a robust 18% growth. Nearly 89% of the corporate book is rated A- and above.
Net Interest Margins (NIM): Axis Bank’s net interest margin contracted to 3.99% from 4.05% in the previous quarter. Puneet Sharma, Chief Financial Officer, attributed the decline to the absence of a tax refund that had been factored in the previous quarter, accounting for a 5-basis-point NIM contraction. He clarified that the bank maintained discipline in deposit pricing, which helped keep spreads steady.
Deposit Growth: Total deposits grew 14% YoY to ₹10.87 lakh crore, with term deposits rising 21% to ₹6.24 lakh crore. Current account savings account (CASA) deposits accounted for 40.6% of the total deposit portfolio, down from 43% a year ago.
Slippages and Recoveries: The bank’s gross slippages for the quarter stood at ₹4,443 crore, down from ₹4,793 crore in the June quarter. Upgrades and recoveries increased to ₹2,069 crore, while write-offs rose by 41% QoQ to ₹3,119 crore.
Commentary: Amitabh Chaudhry, MD & CEO of Axis Bank, noted that the bank’s credit-deposit (CD) ratio aligns with its strategic plan, which has been shared with the Reserve Bank of India. He emphasized that the bank is focused on maintaining a balance between loan growth and deposit mobilization.
The steady rise in NII, coupled with improved asset quality, has bolstered Axis Bank’s profitability, positioning it well for the future despite the challenges posed by rising provisions.
