Mumbai: Third-largest private lender Axis Bank Friday reported a 19 percent growth in June quarter net at Rs 1,978 crore on jump in treasury income, but provisions were up almost three-fold, which capped the profit surge.
The Shikha Sharma-led bank saw a 36 percent rise in other income at Rs 2,298 crore, driven largely by a 150 percent rise in treasury gains of Rs 646 crore, while the core net interest income grew 23 percent to Rs 4,056 crore.
The total income moved up to Rs 12,234 crore, from the Rs 9,980 crore in the year-ago period.
Its provisions steeply rose to Rs 1,121.77 crore, from Rs 386.60 crore a year ago, which included earmarking of Rs 790 crore for bad assets and around Rs 250 crore for contingency measures in future.
Its chief financial officer, S K Gupta, said the loan loss provisions were up due to a higher slippage at Rs 1,183 crore as the facility to restructure assets has been discontinued. The fresh slippages came from across sectors and segments, including large corporates, SME and retail
During the quarter, it restructured Rs 740 crore of assets which were classified for recast previously.
The bank, however, said its asset quality performance for 2015-16 will be better than the last year's and is confident of reining in slippage below last fiscal's Rs 5,700 crore, Gupta said.
It's also keen to keep its credit costs, or provisions, under 0.90 percent for the fiscal.
Its gross non-performing assets ratio moved up marginally to 1.38 percent, from the earlier 1.34 percent.
About two specific large exposures that have analysts worried, Gupta said the Jaypee Group companies are meeting their repayment obligations in a delayed fashion while Essar Steel is meeting its obligations.
According to reports, domestic rating agency CARE Ratings has downgraded the flagship company of the Jaypee Group to default category.
Among the troubled sectors, power constitutes 6.83 percent, infrastructure 7.74 percent and metal 5.96 percent.
Axis Bank witnessed a loan growth of 23 percent during the quarter, which included 28 percent from retail and 27 percent in corporate advances.
Gupta said the bank is gunning for a faster credit growth of 18-20 percent for the entire fiscal.
Despite two base rate cuts cumulating to 0.30 percent during the quarter, the bank is able to maintain its net interest margin at 3.81 percent. Gupta said for the whole fiscal, it will be able to get that much above its long-term target of 3.50 percent.
The share of the low-cost CASA assets improved marginally on a daily average basis to 39.61 percent during the quarter.
Gupta said the deposit rates are continuing to move south and there is a scope for further rate cuts in future.
The cost to income ratio improved to 36 percent from the 42 percent a year ago as there were no new branches opened during the period. The bank is planning to open 200 new branches in the remainder of the fiscal and then, the cost to income ratio will move up, he said.
The bank's total capital adequacy was at 15.05 percent, including 12.15 percent in core tier-I. The bank will not go for any fresh infusion, Gupta said, adding that depending on market conditions, it might look at raising affordable housing and infra bonds, having received shareholder nod to raise up to Rs 15,000 crore from the new instruments.
The overall fee income was up 13 percent while the healthy retail advances growth resulted in a 17 percent growth in retail fee income during the quarter, Gupta said.
The bank is confident of maintaining the overall retail growth in the mid-teens for the fiscal, he added.
Its loans against property book stands at Rs 9,000 crore and the loan to value ratio is under 50 percent.
The stock lost 0.50 percent to close at Rs 580.95 on BSE as against the 0.91 percent correction in the Sensex.
