Axis Bank Q3 net profit misses estimates

Private sector lender Axis Bank reported a mixed bag of earnings on Wednesday. Net profit in the third quarter grew by 4.5% to ₹1,757 crore compared to the corresponding period last year, but missed the Street’s estimates on account of higher provisions.

The growth in net profit was largely on the back of a 15% jump in net interest income to ₹6,453 crore on a year-on-year basis. Other income declined by over 5% to ₹3,786.5 crore during the same period.

The bank reported a marginal improvement in asset quality. Gross NPA stood at 5% in the third quarter versus 5.03% in the previous quarter, and 5.75% in the same period last year.

Net NPA was at 2.09% against 1.99% in the second quarter and 2.36% in the year-ago quarter. The lender reported a 14% increase in provisions during the quarter to ₹3,471 crore from the corresponding period last year.

Axis Bank recognised slippages to the tune of ₹6,214 crore versus ₹3,746 crore in the same period last year. Additional slippages of approximately ₹1,100 crore are said to be mainly on account of one housing finance company.

"Axis Bank has reported better-than-expected margins, but higher opex and LLP led to earnings miss of 13% to a PAT of ₹17.6 bn. Bank has benefitted from lower tax rate in 3Q. Fresh slippages remain elevated at ₹62 bn, but GNPA ratio was stable quarter-on-quarter at 5% due to better recovery/upgrades," said Emkay Global Financial Services in a note to investors.

The bank's balance sheet grew 8% to ₹8,19,039 crore, while advances rose 16% to ₹5,50,138 crore. "Loan growth has improved...mainly led by strong traction in retail book. (Axis) Bank believes that de-growth in international book has run-down its course and the overall blended credit growth now should track domestic credit growth," the brokerage firm said in its report.

Axis Bank shares closed 1.08% lower at ₹710 apiece on the S&P BSE Sensex, while the benchmark shed 0.5% to end the trading session at 41,115.38 points on Wednesday.