MUMBAI: Boosted by the balance sheet of the retail assets of American lender Citi, Axis Bank has reported a 75 per cent street-beating growth in net income at Rs 6,035 crore in the June quarter as against Rs 3,452 crore in the year ago period even though its asset quality worsened on a sequential basis and the resultant higher provisions for bad loans.
The asset quality of the third largest private sector lender, however, worsened sequentially with gross non-performing assets rising 11 basis points to 1.54 per cent and net non-performing assets inching up 3 bps to 0.34 per cent. But the numbers are better on an annualised basis with the GNPA and NNPA improving by 42 bps and 7 bps respectively.
The city-based bank's net interest income (NII) for the quarter rose 12 percent to Rs 13,448 crore from Rs 11,959 crore, again beating the street view, while fee income grew 16 per cent. This is remarkable as the key profitability metric the net interest margin (NIM) which is the spread between fund cost and asset pricing for the quarter stood was down by 5 bps to 4.05 per cent from 4.10 per cent last year.
On the earnings, Amitabh Chaudhry, the chief executive of the bank, said the reporting quarter was crucial in terms of getting all the teams to work together for the last leg of Citi integration (which is completed during the June quarter. The integration is done and was largely seamless given the size and scale of the transition, which added 2 million new customers.
Gross slippages during the quarter were Rs 4,793 crore, compared to Rs 3,990 crore a year ago. Recoveries and upgrades from NPAs during the quarter were Rs 1,503 crore and the bank wrote off NPAs worth Rs 2,206 crore in the quarter. Gross slippage ratio stood at 1.97, while net slippage ratio at 1.37 and net credit cost at 0.97 per cent.
Chaudhry discounted the sequential spike in bad loans saying the asset quality is stable, and credit cost rose due to the seasonality and lower recoveries and upgrades, and this is not indicative of full year credit costs.
Deposits grew 14 per cent, term deposits rose 21 per cent and the low-cost Casa grew 4 per cent, while advances grew 14 per cent of which retail loans grew 18 per cent, SME 20 per cent, and corporate loans grew 6 per cent.
Fee income grew 16 per cent to Rs 5,204 crore of which retail fees grew 18 per cent and constituted 71 per cent of the total fee income. Retail cards and payments fee grew 12 per cent while retail assets, excluding cards and payments, fee grew 13 per cent. Corporate & commercial banking fees grew 12 per cent to Rs 1,497 crore and trading gain stood at Rs 406 crore.
Provision and contingencies stood at Rs 2,039 crore and loan loss provisions stood at Rs 2,551 crore and the cumulative provisions for standard assets and additional other than NPAs stood at Rs 11,732 crores.
As of end June the balance sheet grew 13 per cent to Rs 14,68,163 crore of which advances stood at Rs 9,80,092 crore, which grew 14 percent and retail loans grew 18 per cent to Rs 5,85,112 crore and accounted for 60 per cent of the net advances. The share of secured retail loans is 71 per cent with home loans comprising 28 per cent of the retail book.
Despite good numbers, the Axis counter closed 1.83 per cent down at Rs 1239.75 on the BSE.