Axis Bank reports 41% growth in Q1

Private sector lender Axis bank reported a 41% year-on-year (y-o-y) increase in net profit for the first quarter of the current fiscal, driven by higher net interest income and fee income.

Net profit stood at ₹5,797 crore in the three months through June, compared to ₹4,125 crore during the corresponding period last year. The bank’s profit missed analyst estimates.

Net interest income (NII) or core income jumped 27% year on year to ₹11,958 crore during quarter ended June, as against ₹9,384 crore during the corresponding period of last year.

Net interest margin (NIM) for Q1 FY24 declined by 12 basis points (bps) sequentially to 4.1%, from 4.22% in the previous quarter. According to management, the drop in margins was largely owing to repricing of deposits.

“We expect deposit repricing to happen for the rest of the year. But the pace of growth of deposit cost will moderate through rest of year,” Puneet Sharma, chief financial officer of the bank, said.

Axis Bank saw a 28% year on year growth in fee income to ₹4,488 crore at the end of June this year. Operational cost grew 28% year on year to ₹8,814 crore at the end of June quarter, driven by employee cost which jumped 23% year on year. Axis Bank management said employee attrition for FY23 was 34.8%, which is higher than FY22 and FY21. The bank has seen maximum attrition at around 33-35% at the junior and branch level, said Amitabh Chaudhry, managing director and chief executive officer, Axis Bank.

The bank’s advances grew 22% yoy and 2% sequentially to ₹8.58 trillion as on 30 June. While deposit book grew 17% year on year to ₹9.4 trillion at the end of June quarter, it fell 1% sequentially. Low-cost current and savings account deposits (CASA) ratio fell 162 bps sequentially and grew 181 bps year on year to 45.5%.

Asset quality remained stable with gross non-performing assets (GNPA) at 1.96% of total assets at the end of the June quarter, compared to 2.02% during the corresponding quarter of the previous year. Net non-performing assets (NNPA) were at 0.41% of total assets at the end of June quarter, compared to 0.39% in the corresponding quarter of the previous year.

Gross slippages during the quarter stood at ₹3,990 crore, compared to ₹3,375 crore in Q4 FY23 and ₹3,684 crore in Q1 FY23. Recoveries and upgrades from NPAs during the quarter were at ₹2,305 crore.