The country's third largest private sector lender Axis Bank today reported 22 per cent rise in net profit to Rs 1,347 crore on retail advances, which jumped 45 per cent, as well as bigger other income during the October-December quarter.
"Going forward, our focus on the retail sector will gather more momentum as we want to take the contribution of the retail book in our overall assets to 30 per cent," executive director, corporate centre, Somnath Sengupta told reporters on an earnings conference call here this evening.
He also sounded bullish on the overall advances growth this fiscal year saying the bank will close the year above the trend growth rate.
The bank's net interest income grew 17 per cent to Rs 2,495 crore, while the fee income jumped 15 per cent to Rs 1,405 crore driven by a 35 per cent spike in fee income from the retail business. Income from trading activities chipped in with Rs 159 crore during the quarter, Mr Sengupta said, adding that Rs 180 crore recovery and uprgrades also helped in posting better earnings.
Total income of the bank increased to Rs 8,580.30 crore during the December quarter, from Rs 7,206.77 crore in the year-ago period.
For the first nine months of fiscal year 2012-13, the bank clocked 22 per cent rise in the net profit, to Rs 3,624.28 crore, from Rs 2,964.94 crore in the same period of the previous fiscal year.
The Shikha Sharma-headed bank reported a total income of Rs 24,678.96 crore in the first three quarters, compared to Rs 19,766.93 crore in the same period last financial year.
Terming the numbers as "healthy in a challenging environment", Mr Sengupta said the bank hopes to maintain the margins at 3.50 per cent or above. In the reporting quarter, the bank's NIM stood at 3.57 per cent, a tad down from a year ago when it stood at 3.77 per cent, but a notch higher from the second quarter when it stood at 3.47 per cent.
The market lapped up the numbers and the Axis counter gained nearly 3 per cent intra-day. It settled the trade at Rs 1,424.30, up 2.76 per cent on Bombay Stock Exchange, whose main gauge Sensex rose 83 points today.
Banking analyst at Kotak Securities Saday Sinha said the earnings came "slightly ahead of our expectations", especially the net interest income which surprised positively on back of better than expected NIM (11 bps QoQ improvement, while net profit growth was further aided by lower provisions.
"Although business growth witnessed marginal moderation QoQ, it was better than the overall systemic growth. Asset quality also remained stable while addition to restructured portfolio came more or less similar to previous quarter," Mr Sinha said.
However, Motilal Oswal Securities VP (markets strategy and equities) Rikesh Parikh said Axis Bank's numbers are in line with the estimate. Higher other income, lower operating expenses and provisions contributed to higher net, which was 6 per cent than estimated.
On the incremental advances during the quarter, he said mortgages/home loans contributed 70 per cent of the massive 45 per cent spike in retail advances, followed by 11 per cent each by auto and personal loans, Mr Sengupta said.
The bank, in which the government holds nearly 24 per cent, saw deposits growing 17 per cent to Rs 2,44,501 crore on the back of a healthy 13 per cent rise in low-cost Casa book to Rs 97,757 crore - 40 per cent of its total liabilities.
He also said Casa growth was driven by 22 per cent or Rs 57,521 crore rise in the savings deposits and a 30 per cent in retail term deposits.
During the quarter, other income rose 13 per cent to Rs 1,615 crore, driven by growth in fee income which stood at Rs 1,405 crore - up 15 per cent.
The retail growth helped the bank report flat growth in the net bad loan book which stood unchanged at 0.33 per cent and the gross NPAs also remained unchanged at 1.10 per cent.
The bank's provisions coverage ratio rose over 81 per cent in the quarter, up from 75 per cent a year ago and 80 per cent in the second quarter.
During the quarter, the bank set aside Rs 383 crore for bad loans, which remained stagnant a year ago, but down 22 per cent sequentially from the previous quarter as the bank could get a write back on provision depreciation worth Rs 33 crore during the quarter.
He said this is despite the fact that the bank had restructured loans worth Rs 368 crore during the quarter, taking its overall recast loan book to Rs 1,320 crore.
Stable asset quality also helped Axis post healthy capital adequacy ratio which, including the net profit for the first nine months stood at 15.17 per cent, with the core Tier-I capital ratio being at 10.27 per cent.
When asked about possible slippages in Q4, he said slippages are unlikely to rise in the final quarter and also said there is no rising threat to asset quality form the SME sector, which most of the banks blame for their rising bad loan book.
When asked about status of the arbitration process to recover the $260 million it had advanced to the GMR Group for its Male airport project, which last month was taken over by the Maldivian government, he did not offer a comment saying client specifics cannot be discussed.
He said, however, the bank had made provisions for its exposure to the troubled media company Deccan Chronicle, but did not specify how much or in what percentage.
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