India’s Axis Bank profit beats view on strong interest income

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BENGALURU, Jan 23 (Reuters) – Indian private lender Axis Bank Ltd on Monday reported a stronger-than-expected 62% jump in quarterly profit, as a rise in interest income exceeded an increase in provisions for bad loans.

Demand for credit has rebounded from pandemic lows and boosted bank lending growth, with consumers and businesses increasing spending as the economy revived. Banks are now moving towards a larger share of deposits.

Axis Bank’s net profit rose to 58.53 billion rupees ($719.58 million) in the three months to Dec. 31 from 36.14 billion rupees a year ago, despite a 7.7% rise in provisions, the bank said. in Mumbai in an exchange presentation.

Analysts on average had expected the bank to report a profit of 54.43 billion rupees, according to Refinitiv IBES data.

Net interest income, the difference between interest earned and interest paid, rose 32.4% to 114.59 billion rupees, while net interest margin, a key indicator of a bank’s profitability, it rose to 4.26% from 3.53%.

Over the weekend, rivals ICICI Bank and Kotak Mahindra Bank reported quarterly profits that beat estimates, with a strong improvement in loan growth, although analysts expressed concern over weak growth in deposits.

Deposits in Axis Bank grew by 10%, while loans grew by 15%.

There has been broad-based growth in demand for corporate loans, said Amitabh Chaudhry, the bank’s managing director and chief executive officer in a post-earnings conference call.

Capacity expansion projects are increasing, especially in consumption-driven sectors, Chaudhry said, adding that corporate loan pricing has improved.

Axis Bank’s gross bad loans as a percentage of total loans, a measure of asset quality, improved to 2.38% from 2.5% in the last three months.

Provisions and contingencies increased to 14.38 billion rupees from 13.35 billion rupees a year ago, and 5.50 billion rupees in the previous quarter.

The increase in provisions was largely a prudent measure on large accounts, Chief Financial Officer Puneet Sharma said on the call, without elaborating.

Meanwhile, the bank’s management said on Monday that the private lender was “on track” to consummate its agreement with Citi in the January-March quarter. The $1.6 billion deal was announced in March last year.

The bank may consider raising capital after the Citi deal is completed, Sharma said.

($1 = 81.3390 Indian rupees) (Reporting by Nandan Mandayam and Chris Thomas in Bengaluru, Nupur Anand in Mumbai; Editing by Shinjini Ganguli and Dhanya Ann Thoppil)

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