Axis Bank Q4 Results: Profit Up 54% As Provisions Decline

Axis Bank Ltd.'s profit jumped in the fourth quarter as its provisions fell.

The bank's net profit surged 54% over a year earlier to Rs 4,118 crore in the three months through March, according to its exchange filing. Analysts tracked by Bloomberg estimated a net profit of Rs 3,909.5 crore.

Net interest income, or the core income for the bank, rose 17% year-on-year to Rs 8,815 crore. Other income, too, rose to Rs 4,223 crore, up 19%.

"We have a great momentum as we are entering FY23. There is a positive cultural change in the bank. We are optimistic and very confident of the future," Amitabh Chaudhry, managing director and chief executive at Axis Bank, said in a post-earnings conference all.

Net interest margin for the quarter stood at 3.49%, remaining flat quarter-on-quarter. According to Puneet Sharma, chief financial officer, the bank's margin profile is set to improve over the next eight to 12 quarters.

Asset Quality And Provisions

Asset quality of the lender improved with its gross non-performing asset ratio falling 35 basis points sequentially to 2.82%. Net NPA ratio, too, fell 18 basis points to 0.73%.

In the fourth quarter, Axis Bank reported gross slippages worth Rs 3,981 crore compared with Rs 4,147 crore in the October-December period. Recoveries and upgrades stood at Rs 3,763 crore compared with Rs 3,288 crore in the third quarter.

Provisions during the reported quarter stood at Rs 987.2 crore, down 54.4% year-on-year. Of this, loan loss provisions stood at Rs 602 crore compared with Rs 2,394 crore a year ago.

"We believe that the legacy asset quality issues are firmly behind us," said Chaudhry.

Business Growth

Axis Bank's total advances rose 15% year-on-year to Rs 7.07 lakh crore. Of this, retail advances grew 21% from a year earlier to Rs 3.99 lakh crore, while corporate advances were up 4% at Rs 2.3 lakh crore.

The bank's home loan book grew to Rs 1.43 lakh crore, up 18% year-on-year. Personal loan book rose 15% from a year ago to Rs 45,242 crore, while credit card loans rose 19% to Rs 15,847 crore.

The lender said it added 26.7 lakh new credit cards in FY22, its highest ever card additions. The new card guidelines issued by the Reserve Bank of India will immediately impact the number of outstanding cards at Axis Bank, said Sanjeev Moghe, executive vice president and head of cards and payments.

"There are business cycles and there are regulatory cycles in the businesses. We believe the business will bounce back from these guidelines. We do not see any impact on our co-branded card partnerships owing to the new guidelines," Moghe said.

The bank will continue to focus on businesses which are NIM accretive and aid the lender is delivering better return on assets. According to Rajiv Anand, deputy managing director, Axis Bank will grow its corporate lending portfolio in the coming quarters as the rate environment has improved.

Total deposits stood at Rs 7.66 lakh crore as of March, up 19% year-on-year. Low-cost current account, savings account deposits constituted 43% of the book, while retail term deposits constituted 38%.

Shares of Axis Bank closed 1.38% higher before the results were announced compared with a 1.21% gain in the benchmark Nifty 50.