Axis Bank: Strong loan growth, fees triple Axis Bank’s net income in Q3

Mumbai: Axis Bank reported a tripling of net profit on strong growth in loans and fee income, although provisions for bad advances fell due to lower slippages and higher collections.

Net profit rose to ₹3,614 crore in the quarter ended Dec 2021 from ₹1,117 crore a year earlier, driven by 17% growth in net interest income (NII) and growth of 15% of commission income.

CEO Amitabh Chaudhry said the bank is now well positioned to take advantage of the improving economic scenario. “All the hard work we have done in terms of initial provision, careful restructuring and building a loan portfolio is now paying off. As things open up after Omicron, we are well positioned to pull leveraged our business, customer relationships and market presence and grow 500 to 600 basis points faster than the system,” he said.

Axis’ net interest margin (NIM) or the difference in return the bank earns on loans and pays out on deposits increased slightly to 3.53% from 3.51% in the year last year, although she did not receive a tax refund like last year.

The bank’s loan portfolio grew across all categories, with retail loans increasing by 18% year-on-year, SME loans by 20%, corporate loans by 13% and medium-sized business loans by 44% over one year. Total other income increased by 31% to ₹3,840,000,000, including a 15% increase in retail fee income.

The bank added a record 7.70 lakh credit cards during the quarter.

Total provisions halved to ₹1,335 crore in December 2021 from ₹3,757 crore a year earlier as slippages eased and recoveries accelerated.

Gross slippages in the quarter were ₹4,147 crore from ₹7,993 crore a year earlier. After factoring in recoveries and upgrades of ₹3,288 crore, net slippages for the quarter amounted to ₹860 crore, down 85% from ₹5,831 crore a year earlier.

Chief Financial Officer Puneet Sharma said he expects further moderation in credit costs as corporate lumpy exposures have diminished and the recovery of bad loans is expected to accelerate.

“The decline in provisions is due to lower slippages and the strong recovery in lending. We had let some loans slip during Covid and avoided restructuring because we were confident in the recovery and that is what is happening now” , Sharma said.

Axis Bank holds accumulated provisions in addition to non-performing assets of ₹13,404 crore at the end of December 2021 and did not use any Covid provisions during the quarter, giving it enough headroom for any spike in bad debts.


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