Private sector lender Axis Bank reported a fiscal second quarter net profit of Rs 1,682.67 crore on the back of robust net interest income, trading profit and miscellaneous income. In the year-ago period, the private sector lender had posted a loss of Rs 112 crore.

The bank improved its provision coverage ratio to 77% and set aside Rs 5,012 crore as Covid provision. Its cumulative provision was at 1.9% of its advances, which were about Rs 10,840 crore.

"While we remain conservative in our polices and processes, we continue to pursue growth wherever we see the right opportunity. We want to be ahead of the curve as far as our provisions are concerned and that is reflected in this quarter also," said Axis Bank chief executive officer Amitabh Chaudhry.

With the bank focusing on the granularity of fees, net interest income (NII) grew 20% YOY to Rs 7,326 crore, led by a reduction in funding cost and strong recovery in fees.

The net interest margin (NIM) was at 3.58% in the quarter ended 30 September compared to 3.51% in Q2FY20. Margins improved by 18 basis points sequentially due to a capital raising initiative, interest income reversal, and lower funding costs.

Retail bank fees grew by 82% as the bank focused aggressively on the distribution of third-party products like insurance. On the corporate side the bank focused on transaction fees and cash management services.

Axis Bank's advances also grew sequentially with retail banking advances, led by home loans, auto loans, and rural loans, which grew by Rs 7,100 crore to Rs 3,05,700 crore. Corporate advances growth was led by working capital loans, which grew by Rs 4,500 crore to Rs 2,10,100 crore, and by SME loans, which grew by Rs 3,500 crore to 60,600 crore. The bank's domestic incremental advances grew Rs 15,100 crore. Treasury gains also contributed Rs 760 crore to the profits of the bank.

The bank continued to be cautious on its unsecured book, i.e. credit cards and personal loans.

Axis Bank's asset quality has remained stable with the bank doing writing-off of bad loans, recoveries, and a series of upgrades. During the quarter the bank wrote off Rs 1,812 crore of loans and upgraded Rs 1,848 crore of loans. At Rs 931 crore, fresh slippages were low compared to the preceding quarter. Even considering the standstill accounts in the total, fresh slippages amounted to just Rs 1,570 crore.

In the year-ago period, fresh slippages mainly from its corporate book stood at Rs 4,983 crore, and it was Rs 2,218 crore in the preceding quarter. The gross NPA of the bank was at Rs 26,832 crore, improving from a gross bad loan figure of Rs 29,560 crore at the end of the first quarter.