Private sector lender Axis Bank on Monday reported that its net profit tripled year-on-year to Rs 3,614 crore in the December quarter of FY22 on higher revenue and lower provisions.

The bank’s total provisions and contingency expenses stood at Rs 1,335 crore, down 64% year-on-year. The bank reported total revenue of Rs 21,101 crore for the three months ended December 31, up 15 percent from a year earlier. Axis Bank’s net interest income (NII) – the difference between interest earned and interest paid – rose 17 per cent year-on-year to Rs 8,653 crore as its net interest margin (NIM), a key measure of profitability indicator) was 3.53%, a month-on-month increase of 14 basis points (bps). Axis Bank’s other income, including fees, trading profits and miscellaneous income, rose 31 percent year-on-year to Rs 3,840 crore in the three months to December.

The bank’s gross non-performing asset (NPA) ratio (non-performing loans as a percentage of total advances) was 3.17% in the third quarter of fiscal 2022, down 36 basis points quarter-on-quarter and down 27 basis points year-over-year. After provisions, the net NPA ratio was 0.91% in the third quarter, compared to 1.08% in the September quarter of FY22 and 0.74% in the same period last year.

Puneet Sharma, chief financial officer at Axis Bank, said: “With our outlook on overall credit performance, we do expect credit costs to continue to moderate as we have shed significant wholesale exposure.”

Amitabh Chaudhry, chief executive of Axis Bank, said that over the past few years, the bank had set the right provisions to absorb the up-front Covid-19-related blow by not making excessive ECLGS loans or even restructuring. “This is reflected in improved asset quality,” Chowdhury said.

Launched on May 20, 2020, ECLGS provides 100% guarantee coverage to selected borrowers, although it was originally designed for small business borrowers with fund-based credit outstanding up to Rs 250 crore, it is now Other parts are also included.

The bank’s gross slippage in Q3FY22 was Rs 4,147 crore compared to Rs 5,464 crore in Q2 and Rs 7,993 crore in Q3 FY21. The slippage of the loan book was Rs 3,332 crore and the slippage of the investment risk was Rs 8.15 crore. Its recoveries and upgrades from NPA stood at Rs 3,288 crore during the quarter, while write-offs were at Rs 1,707 crore. Axis Bank’s advances rose 17% year-on-year to Rs 6.64 trillion as at December 31. Retail loans rose 18% year-on-year to Rs 3.67 trillion and accounted for 55% of net bank advances. The share of secured retail loans is 80%, and housing loans account for 37% of the retail book. The bank’s corporate loan book rose 13% year-on-year to Rs 2.29 trillion.

“Mortgage loans are the largest (in the retail lending segment). But small business banking is growing strongly and personal loans are starting to show quarter-on-quarter growth. Growth in auto loans is limited due to supply-side issues,” Axis Bank Group Executive and Retail Lending Director Sumit Bali said.

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