The acquisition of Citibank’s consumer business in India has pulled down Axis Bank’s results with the private sector lender reporting a net loss of Rs 5,728 crore in the quarter ended 31 March 2023.

In the year-ago quarter, Axis Bank had reported a net profit of Rs 4,118 crore.

Sans the Citi deal, Axis Bank would have reported a net profit of Rs 6,625 crore in the fiscal fourth quarter ended 31 March 2023.

Axis Bank announced on 1 March the completion of the acquisition of Citi India’s consumer banking business for Rs 11,603 crore.

The bank said in a statement on Thursday that it made prudent accounting choices in relation to one-time items of Rs 12,490 crore.

Total provisions and contingencies fell 69% from the earlier-year quarter to Rs 306 crore. Of this, provisions towards loan losses stood at Rs 270 crore. 

The bank said it has not utilised Covid-19 provisions during the quarter and holds cumulative provisions of Rs 11,928 crore as of March-end. This is over and above the bad loan provisioning included in the provision coverage ratio calculations, it said.

Net interest income (NII) or the difference between interest earned and interest expended rose 33% year-on-year to Rs 11,742 crore. Other income for the March quarter jumped 16% YoY to Rs 4,895 crore. 

Net interest margin (NIM) expanded by 73 basis points YoY to 4.22% in the quarter ended March 2023.

“Our margins are 42 bps above our structural guidance on a reported basis. We have a significant cushion to our margins and we still believe depending on where rates move, we have enough ability on our P&L to deliver our aspirational return ROE," said Axis Bank chief financial officer Puneet Sharma.

The bank’s asset quality improved during the fourth quarter, with gross non-performing asset (NPA) ratio at 2.02% in Q4, down 36 bps sequentially. 

The net NPA ratio improved by 8 basis points sequentially to stand at 0.39% in Q4 of FY23. 

Gross slippages in Q4 FY23 stood at Rs 3,375 crore, compared to Rs 3,807 crore in Q3 FY23 and Rs 3,981 crore in Q4 FY22.

Recoveries and upgrades from NPAs during the quarter were at Rs 2,699 crore. In the quarter, the bank wrote off NPAs aggregating Rs 2,429 crore.

The lender’s advances grew 19% YoY to Rs 8.45 lakh crore as on 31 March 2023. Sequentially, it was up 11%.

“The pricing environment is quite conducive at this point in time for us to be able to continue to support credit growth," said Axis Bank deputy managing director Rajiv Anand.

“…like I have been mentioning that fresh private capex has well and truly started. One could argue that it should be much stronger than what it is today but it is fair to say that the private capex cycle has started."

The corporate loan book grew 14% YoY to Rs 2.65 lakh crore while retail loans rose 22% to Rs 4.88 lakh crore, and accounted for 58% of the bank's net advances.

Small business banking grew 50% YoY and the rural loan portfolio rose 26%. Credit card advances grew 97% YoY due to the Citi portfolio acquisition.

Axis Bank’s total deposits grew to Rs 9.46 lakh crore, up 15% YoY and 12% sequentially. Out of this, savings account deposits rose by 23% and current account deposits by 17%. The share of CASA deposits in total deposits stood at 47%, up 215 basis points from the year-ago period.