Axis Bank's Q1 Performance: Net Profit Up Despite Asset Quality Challenges

Axis Bank posted a 5.66% rise in consolidated net profit for the June quarter at Rs 6,436 crore, despite asset quality challenges. The bank experienced a surge in gross slippages and higher loan loss provisions. However, core net interest income grew 12%, and the bank saw improvements across various subsidiaries.

Axis Bank reported a 5.66% rise in consolidated net profit for the June quarter, reaching Rs 6,436 crore. This performance was restricted by challenges in asset quality.

On a standalone basis, Axis Bank, the third-largest private sector lender, saw a 4% increase in net profit to Rs 6,035 crore. The core net interest income rose by 12% to Rs 13,448 crore, thanks to a stable net interest margin of 4.05% and a 14% growth in advances. Other income also saw a 14% rise, amounting to Rs 5,783 crore.

The bank faced a significant jump in gross slippages, reported at Rs 4,793 crore, up from Rs 3,471 crore in the previous quarter. Chief Financial Officer Puneet Sharma cited seasonality and elevated setbacks on agricultural loans as factors but did not disclose the exact impact on agri exposure.

The loan loss provisions more than doubled to Rs 2,551 crore compared to the previous year. Despite higher credit costs on unsecured loans, Sharma noted that these costs are within the bank's set guardrails.

Axis Bank issued 10 lakh credit cards and observed a 14% growth in deposits. Retail loans saw an 18% increase, with home loans and SME loans growing by 6% and 20%, respectively. The gross non-performing assets ratio improved to 1.54%.

Subsidiaries like Axis Finance and the asset management arm also reported significant profit gains. However, analysts at Stoxbox described the earnings as muted and noted high provisions.

(With inputs from agencies.)