MUMBAI: The third largest private sector lender Axis Bank has reported a disappointing 3.83% on-year growth in net profit at Rs 6,304 crore in the December quarter following moderate loan growth and a spike in loan loss provisions due to rising delinquencies. The number on a sequential basis dipped a full 9% from Rs 6917.57 crore.
Axis Bank saw its gross non-performing assets (NPAs) at 1.46%, and net NPAs at 0.35%, marginally up respectively from 1.44% and 0.34% a year ago.
The bank reported fresh slippages of Rs 5,432 crore, up 46% on-year and 22.25% sequentially. Accordingly, loan loss provisions jumped to Rs 2,185 crore from Rs 1,441 crore in Q2 and Rs 691 crore a year ago. Total provisions and contingencies stood at Rs 2,156 crore compared to Rs 2,204 crore in Q2 and Rs 1,028 crore in Q3FY24.
Brokerages were expecting the third-largest private lender to log in a 5.6% jump in net income in the third quarter of the current fiscal.
Axis Bank shares crashed 3% immediately after the numbers were announced. The dip in share price was also due to a block deal which saw over 4.4 million shares changing hands on the bourses. The details of the buyers and sellers are not known yet. The shares were trading at 14-month lows.
The shares recovered later to close with a 1.25% gain at Rs 1,040.20 on the BSE, reflecting the overall rally in the market and especially in banking stocks.
In an exchange filing, the bank said its interest income rose 11% to Rs 30,954 crore from Rs 27,961 crore a year ago, while its interest expenses rose 12% at Rs 17,348 crore in the quarter under review, from Rs 15,429 crore a year ago.
The core net interest income grew 9% to Rs 13,606 crore due to muted loan growth, and the net interest margin, the key measure of profitability, declined by 6 bps to 3.93% sequentially and 8 bps annually.
Advances grew 9% on-year and 1% sequentially to Rs 10.14 trillion, driven by an 11% growth in retail loans, which accounted for 60% of the bank’s advances portfolio. Under retail loans, home loans grew 3%, personal loans at 17%, credit card advances grew 8%, small business banking at 20%, and rural loans at 17%. Additionally, SME loans grew 15%, while corporate loans grew 4%, with the domestic corporate book growing by 3%.
On the other hand, the bank’s total deposits grew by 9%, growing in tandem with loans. Of this, current account deposits grew 8%, while savings deposits were flat and term deposits grew 14%.