Axis Bank reported steady June Quarter 2023 results aided by strong loan growth and other income. The third largest private lender reported robust net interest income (NII) rising 27% YoY in Q1FY24. NII came in at Rs 11,959 crore in June Quarter 2023 compared to Rs 9,384 crore corresponding quarter previous year. Net interest margin (NIM) stood at 4.10%, up 50 basis points YoY in Q1FY24. Sequentially NIMs fell 12 bps due to deposit re-pricing and higher proportion of corporate and SME loans in Q1FY24 loan book. The management expects cost of funds to rise in the coming quarters putting pressure on NIMs.
Other income rose 74% YoY to Rs 5,087 crore supported by fee income (up 28% YoY) and trading income of Rs 519 crore (trading loss of Rs 667 crore in Q1FY23). Operating expenses at Rs 8,232 crore was up 28% YoY in Q1FY24. Core operating profit (operating revenue – operating expenses) jumped 27% YoY to Rs 8,295 crore in June Quarter 2023. Provisions and contingencies trebled YoY reported at Rs 1035 crore in June Quarter 2023. Net profit rose 41% YoY, despite high provisions supported by high other income and net interest income in June Quarter 2023. Net profit stood at Rs 5,797 crore in Q1FY24.
Stable asset quality, gross slippage ratio falls
Gross NPA and Net NPA ratio improved 80 bps and 23 bps respectively in June Quarter 2023 aided by healthy recoveries. Gross NPA and Net NPA ratio came in at 1.96% and 0.41% respectively in Q1FY24.
Recoveries and upgrades from NPAs during the quarter were Rs 2,305 crore. The Bank in the quarter wrote off NPAs aggregating Rs 2,131 crore. Gross slippage ratio (annualized) stood at 1.87% and declined 18 bps YOY in Q1FY24. Slippage ratio is the new accretion to NPAs in the quarter as a ratio to the standard advances at the beginning of the quarter.
Deposits and advances on a strong growth trajectory
Total deposits of Rs 9,41,690 crore grew 17% YoY as on June 30,2023 compared to Rs 8,03,736 crore in the same period previous year. Savings account and current account deposits grew 22% and 23% YoY and term deposits climbed 13% YoY as on June 30, 2023. CASA (current accounts and savings account) ratio stood at 46%, up 182 bps YoY as on June 30, 2023. Axis Bank’s loan book rose 22% YoY to Rs 8,58,511 crore as on June 30, 2023. Retail loan book grew 21% YoY and 2% sequentially to Rs 4,97,810 crores and accounted for 58% of the net advances of the Bank. The share of secured retail loans was 77%, with home loans comprising 32% of the retail book. Homeloans reported muted growth compared to unsecured loans which rose in double-digits in Q1FY24. Home loans grew 8% YoY, personal loans grew 21% YoY, credit card advances grew 91% YoY, small business banking grew 46% YoY and rural loans jumped 22% YoY as on June 30, 2023. Corporate loan book (32%of loan book) grew 25% YoY and 2% QoQ to Rs 2,73,043 crore of which domestic corporate book grew 36% YOY and 4% sequentially.
