Axis Bank Q3 profit surges, asset quality improves

Axis Bank, on Tuesday, reported a stable set of numbers for the quarter ended December 31, with profit after tax (PAT) rising 131% to ₹1,681 crore, from ₹726 crore last year.

This surge in the bottomline was driven by a significant rise in the bank’s non-interest income, which includes fee income, trading profit and miscellaneous income. The bank said its non-interest income grew 54% year-on-year in the third quarter of fiscal year 2018-19 to ₹ 4,001 crore from ₹ 2,593 crore, a year ago. Of this, fee income rose 16% to ₹ 2,615 crore, while retail fees grew 22% over last year and constituted 59% of the total fee income.

The bank’s miscellaneous income for the quarter came in at ₹1,007 crore, growing nearly seven times from ₹148 crore in the year-ago period. Axis Bank said its trading profits for the quarter grew 90% to ₹379 crore, from ₹ 200 crore in the corresponding quarter, last year.

In its exchange filing, Axis Bank also said it recovered ₹998 crore during the quarter, largely comprising of two accounts from the prudentially written-off pool, a significant jump compared to ₹40 crore in the same period last year. It also sold its stake in two strategic investments during the quarter, resulting in a gain of ₹342 crore.

Apart from the non-interest income, the bank’s net interest income (NII) grew 18% to ₹5,604 crore, up from ₹ 4,732 crore last year. Net interest margin (NIM) stood at 3.47%, a slight improvement from 3.36% in the comparable quarter.

On the asset quality front too there was some improvement, with the gross NPA ratio improving to 5.75% from 5.96% on a sequential basis. Net NPA ratio stood at 2.36%, down from 2.54% in the second quarter of FY18. Recoveries and upgrades stood at ₹2,620 crore for the quarter.

Gross slippages came in at ₹3,746 crore, up from ₹2,777 crore last quarter. However, the bank said that corporate lending slippages stood at ₹1,887 crore of which 98% came from BB and below rated accounts. Axis Bank’s BB and below book now stands at ₹ 7,645 crore, which is 1.4% of the bank’s gross customer assets, a significant improvement from the peak at 7.3% earlier.