Axis Bank on Friday posted an over 18 per cent rise in net profit at Rs 1,611 crore for the second quarter ended September 30, on the back of a healthy rise in retail loans that pushed its core interest income.
The bank, which is the country's third largest private sector lender, had reported a post-tax net of Rs 1,362 crore in the reporting period for the previous fiscal.
Profit growth came on the back of a healthy 20 per cent rise in the core net interest income at Rs 3,524 crore, which was one of the prime drivers of profitability, Axis Bank Executive Director and Chief Financial Officer SK Gupta told reporters in Mumbai.
Growth was largely fuelled by a healthy 27 per cent rise in the high margin retail loans, which pushed the overall credit growth to 20 per cent, Gupta said.
"Last year, retail credit growth was 3-4 per cent higher than non-retail book. This year we feel it will be faster than that," the CFO said.
The Shikha Sharma-led private bank posted a 10.28 per cent rise in other income during the reporting quarter at Rs 1,947 crore, while the core fee income within that component was up 11 per cent at Rs 1,590 crore.
There was a healthy 73.82 per cent dip in miscellaneous income at Rs 86.22 crore as in FY14, but this was offset by a Rs 282 crore repatriation from overseas branches.
Axis Bank expanded its net interest margin to 3.97 per cent from 3.79 per cent year-on-year, on the back of a 0.07 per cent rise in the yield on advances and a 0.06 per cent dip in the cost of funds, largely due to increase in the proportion on the low-cost Casa deposits.
The private sector lender expects to close the fiscal with an NIM of 3.50 per cent, Gupta said, adding the bank also expects to maintain the credit growth momentum and is targeting a 20 per cent rise and expects a deposit growth of up to 15 per cent.
The average daily Casa deposits moved up by 1 percentage point to 40 per cent, while the Casa ratio stood at 45 per cent, up from 43 per cent a year ago, the executive director said.
On the asset quality front, the bank added Rs 911 to its NPAs, while upgraded Rs 163 crore of assets and wrote off Rs 597 crore. The gross non-performing assets ratio moved up to 1.34 per cent as against 1.19 per cent on an annual basis.
Gupta said the bank is on course on its target of restricting the NPA accretion to under Rs 6,500 crore during the fiscal and has added Rs 2,700 crore in bad assets in the first two quarters.
Some accounts in the mid-corporate segment faced difficulties, resulting in restructuring of Rs 577 crore during the quarter. Its provisions moved up to Rs 725 crore, from Rs 687 crore y-o-y and Rs 387 crore in the June quarter, but the CFO said there is nothing to be concerned about.
Axis Bank plans to raise up to Rs 6,000 crore through a long-term infrastructure bond issue in the second half of the fiscal, using the special instrument introduced by the Reserve Bank of India (RBI) in July, Gupta said.
Shares of Axis Bank closed 2.04 per cent higher at Rs 401.95 on the Bombay Stock Exchange (BSE) on Friday. The results were announced after market hours.