- Net interest income grows 21% year-on-year and 6% sequentially
- Net interest margins hit a 20-quarter high of 3.6%, but lags peers
- The bank’s asset quality also showed an improvement during the quarter, with fresh accretion of slippages declining
The bank’s key financial parameters showed improvement with net interest income clocking a growth of 21% year-on-year and 6% sequentially, as net interest margins improved by 14 bps annually and 11 bps sequentially to 3.60% during the quarter. This bank’s margins have hit a 20-quarter high.
Speaking on the merger with
"Based on limited data, we have limited concerns on business, which are all doing quite well. We cannot be engaging with Citi till we get CCI approval. Once approval comes we can engage more actively. The merger date refers to the date when we take over the assets. The customer experience has to be hassle-free," he said.
While NIMs continue to trend marginally lower than its bigger peers, the lender has shown an improvement across all metrics during the quarter.
"You are seeing delivery on NIM trajectory on what we had said earlier. You can take on higher risk and increase NIMs, so our growth factors in credit implication on the book. A rising interest rate environment plays to the strength of the larger bank and it should be positive for us on a net basis," said
Fee income also grew at a robust rate 34% year-on-year, which is a big contributor to profits of private lenders. Retail fee income grew 43% annually. The bank’s core operating profit grew 17% annually and 5% sequentially.
After two years of the pandemic, lenders are pushing for growth and Axis Bank reported a loan growth across segments, but it has disappointed analysts as it is lower compared to its peers. While retail loans grew 25% annually and 3% sequentially, small business loans and rural loans grew 74% and 42%, respectively, compared to the corresponding quarter last year. Overall loan growth stoof at 14% annually.
The bank’s asset quality also showed an improvement during the quarter, with fresh accretion of slippages declining along with aggregate non-performing assets. The gross non-performing assets came in at 2.76%, which is lower by 109 bps year-on-year and 6 basis points sequentially.
The bank’s net non-performing assets came in at 0.64%, which is 56 bps lower annually and 9 basis points sequentially. The bank’s accretion of fresh bad loans also declined. While the gross slippage ratio declined 210 bps year-on-year and 33 bps sequentially, the net slippage ratio was down 0.41% 219 bps annually. The bank’s provision coverage ratio stood at 77%.
On a quarterly average basis, savings accounts grew 16% annually and 4% sequentially, while current accounts grew 15% annually. Term deposits grew 13% annually. On a quarterly basis, CASA grew 16% annually and 1% sequentially. The bank’s CASA ratio stood at 43%.
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