Axis Bank Q3 net profit rises 56%; reports slowed home loan growth

Mumbai: Axis Bank on Monday reported a 56 per cent jump in its December quarter consolidated net at Rs 6,187.38 crore, helped by a healthy core income growth aided by widening margins.

On a standalone basis, the third largest private sector lender reported a 62 per cent growth at Rs 5,853 crore.

Axis Bank Q3FY23 results

The core net interest income was up 32 per cent at Rs 11,459 crore, helped by a 0.73 per cent improvement in the net interest margin at 4.26 per cent, and a 15 per cent advances growth.

The advances growth seemed to be largely driven by small businesses, which showed a 42 per cent increase. Retail grew 17 per cent, aided by growth in the unsecured products like credit cards and personal loans but the bank maintained that it is comfortable with this growth.

Mortgage loans, generally the bulwark of retail growth for lenders, grew by a tepid 9 per cent and its head of retail lending Sumit Bali said this was due to the rate hikes, which are elongating the time between enquiries and disbursements.

On the wholesale advances front, the bank reported an 8 per cent growth and its managing director and chief executive Amitabh Chaudhry said the pricing situation is improving with demand coming from segments like renewable energy, speciality chemicals and roads.

The bank's non-interest income grew 21 per cent to Rs 4,665 crore, helped largely by 30 per cent increase in the retail fee income.

On the asset quality front, its overall provisions increased to Rs 1,438 crore during the reporting quarter as against Rs 550 crore in the quarter-ago period.

Its chief financial officer Puneet Sharma said it is not worried about the increase, pointing out that a part of the increase came because it took a Rs 410 crore prudential hit on slippages by recognising some loans unpaid for less than 90 days as non-performing.

The gross slippages came at Rs 3,807 crore, and the gross non performing assets ratio narrowed down to 2.38 per cent from 2.50 per cent in September.

The bank reported a slower -- 9 per cent -- growth in deposits for the quarter. Its deputy managing director Rajiv Anand said it is imperative to see the number go up for the system.

For the next fiscal, Anand said the credit growth will come at 14-15 per cent and will be broad-based between retail and wholesale.

Sharma attributed the improvement in NIMs to structural improvements, pricing discipline and the rate hikes, and added that even after the liability repricing in the March and April quarters. Right now, it has built a cushion of 0.46 per cent over the aspirations, and would like to maintain the same, Sharma said.

The bank's overall capital adequacy stood at 17.60 per cent as on December 31, 2022, and it will be looking at an infusion only after consummating the big-ticket acquisition of Citi's retail business, Sharma said.

The Citi business is progressing line with expectations and the bank will consummate the transaction in the last quarter as it had hoped for, Sabrat Mohanty, group executive for transformation, said.

He also said that the lender has not taken a final call on when it wishes to up its stake in Max Life Insurance or the price it will be paying for the same. As per norms, it will be making a fresh application to the regulators for the purchase of more shares, Mohanty added.

On Monday, shares of the bank closed 0.28 per cent up at Rs 933.25 apiece on the BSE.