Axis Bank Q2 net rises 21 per cent on one-time income, NIM

Axis Bank, India's third-largest private sector lender, said on Thursday that its profit rose 21.2 per cent to Rs 1,362 crore in the September quarter after healthy growth in net interest margin and one-time income of Rs 280 crore.

"We have reported a net profit of Rs 1,362 crore, which is 21.25 per year on year. Our balance sheet also grew 16 per cent to Rs 3,51,363 crore during the quarter," Somnath Sengupta, executive director of Axis Bank, told reporters on a conference call this evening.

Net interest income rose 26 per cent to Rs 2,937 crore from Rs 2,327 crore a year earlier, while the net interest margin (NIM) was 3.79 per cent compared with 3.46 per cent in the year-ago quarter.

"We expect NIM to remain stable going ahead and stay above 3.5 per cent in the rest of FY14," Sengupta said. Total income rose to Rs 9,375.08 crore during the quarter from Rs 8,280.29 crore in the same period last year," Mr Sengupta said.

"Core performance came ahead of our expectations on the back of better-than-expected NIM, which rose 33 bps, though overall numbers were aided by Rs 280 crore of exceptional item in the non-interest income side," said Saday Sinha, a banking analyst at Kotak Securities.

Mr Sinha said the bank faces higher asset quality risk due to its exposure to infrastructure and other stressed sectors.

During the first half of 2013-14, Axis Bank clocked an almost 18 per cent increase in net profit to Rs 2,771.24 crore from Rs 2,277.06 crore a year earlier. Total income in the first six months was Rs 18,434.20 crore compared with Rs 16,098.66 crore earlier.

As of September 30, gross non-performing assets (NPAs) and net NPAs stood at 1.19 per cent and 0.37 per cent, respectively, as against 1.10 per cent and 0.33 per cent a year earlier.

Mr Sengupta said fresh slippages came mostly from the corporate side.

Axis Bank's other income grew 11 per cent to Rs 1,766 crore in the quarter from Rs 1,593 crore after the one-time item of Rs 280 crore. Fee income grew 7 per cent to Rs 1,432 crore.

"We also restructured assets worth Rs 1,030 crore at the end of the quarter," Mr Sengupta said.

He further said that the bank's forex borrowing during the quarter was almost Rs 2,000 crore.

"We have transferred a major part of our government securities, around 96 per cent, that were lying in AFS (available for sale) to the HTM (held to maturity) and we have booked a loss upfront of Rs 114 crore as a result and we did not opt to amortise the losses."

The bank's capital adequacy ratio stood at 16.35 per cent at the end of the second quarter.