Axis Bank reports 62 per cent higher profits in Q3FY23

Axis Bank on Monday reported 62% higher standalone net profits for Q3FY23 at Rs 5,853 crore, boosted largely by a 32% growth in net interest income (NII) to Rs 11,459 crore in the quarter. Like other private banks, the surge in net profits of Axis Bank can be attributed to the fact that the rise in the cost of deposits has not kept pace with the rise in the yield on loans.

Loan yields have gone up due to RBI hiking rates by 225 basis points since May 2022.

Axis Bank also saw net interest margins (NIM) expanding by 73 basis points to 4.26%.

As of the close of December quarter, Axis Bank saw total deposits grow 9.9% yoy to Rs8.48 trillion while advances grew 14.6% to Rs7.62 trillion. Axis Bank hopes to maintain 14-15% credit growth in the next year, although NIMs are likely to again taper to around 3.80%.

The share of CASA (current and savings accounts) deposits increased by 18 bps to 44%. CASA deposits grew 10% yoy and 4% sequentially.

Among lending products, Axis Bank expects its credit cards business to gain traction with the Citi buy. Retail loans grew 17% yoy and now account for 56% of total advances. Provisions for doubtful debts were up 7.7% at Rs1,474 crore due to one-time prudent provisions of Rs340 crore. However, the gross NPAs fell by 12 basis points sequentially to 2.38%. Net NPAs fell to 0.47%. Axis Bank has a comfortable provision coverage ratio (PCR) of 81% as of December 2022 with Basel III capital adequacy ratio at 17.6%. Overall, the transmission gap helped Axis Bank to report robust profit growth.