Axis Bank reported its highest quarterly net profit on the back of elevated loan growth, lower provisioning and improved asset quality.

The country’s third largest private bank by assets recorded a net profit of Rs 3,133 crore in the fiscal second quarter ended September, up 86% from Rs 1,682 crore a year ago.

With the granular growth in its CASA (current account savings account) deposits, the bank was also able to bring down its cost of funds to 3.87% from 4.30% in the year-ago period.

The lender’s net interest income (NII) grew 8% year-on-year to Rs 7,901 crore, as the cost of funds fell and fee income rose by 17% to Rs 3,231 crore. Net interest margin (NIM) stood at 3.39% in the September quarter.

“On the business front we are seeing solid progress. We continue our focus on SMEs and mid-corporate segments, and on the retail side we see better disbursements and growth driven by secured products. We really hope to make the upcoming festivities special for our customers, with our ‘Dil Se Open Celebrations’ providing exciting deals and discounts across e-commerce platforms and local retailers," said Axis Bank managing director and CEO Amitabh Chaudhry in a media call.

The bank’s operating profit in the September quarter stood at Rs 5,928 crore. Core operating profit was at Rs 5,456 crore.

 The non-interest income for the second quarter rose 6% YoY to Rs 3,798 crore. This was up 13% on a sequential basis.

Specific loan provisions during the quarter stood at Rs 927 crore as against Rs 2,865 crore.  Total Provisions and contingencies fell to Rs 1,735 crore from Rs 3,302 crore in the preceding quarter and Rs 4,343 crore in the year-ago quarter.

The bank’s provision coverage stood at 70% versus 77% a year ago and 70% a quarter ago. Provisions prior to technical write-offs stood at 88%.

The gross non-performing assets (NPAs) dropped to the lowest level in 20 quarters to 3.53%. This was at 3.85% in the preceding quarter and 4.18% in the earlier-year quarter.

Fresh slippages during the quarter stood at Rs 5,464 crore, lower than Rs 6,518 crore in the preceding quarter and higher than Rs 1,751 crore (as per IRAC norms) in the year-ago quarter. 

"Slippages in Q2FY21 moderated due to regulatory forbearances that do not exist in the current quarter. Recoveries and upgrades from NPAs during the quarter were Rs 4,757 crore while write-offs were Rs 2,508 crore. Consequently, there were net slippages in NPAs (before write-offs) for the quarter of Rs 707 crore compared to Rs 3,976 crore in Q1FY22. Net slippages in NPAs (before write-offs) for retail loans stood at Rs 697 crore, and for SME there was a Rs 16 crore decrease in NPAs (before write-offs),” the bank said.

Fee income grew 17% YoY to Rs 3,231 crore. While retail fees rose 19% and constituted 63% of the bank’s total fee income, the corporate & commercial banking fee grew 15%.

The bank’s balance sheet grew 17% YoY and stood at Rs 10.5 lakh crore as of September 2021. The loan book grew 10% YoY, driven by focused business segments. Retail loans, which accounted for 56% of the net advances, grew 16% over the previous year and 4% sequentially. About 80% of this book is secured, Axis Bank said.

SME loans grew 18% YoY and 7% sequentially. Mid-corporate loans grew 32% YoY and 10% over the preceding quarter.

The bank’s deposits grew 18% to Rs 7,36,286 crore. In the deposit mix, the CASA ratio stood at 42%, up 201 basis points compared to the year-ago period. Retail term deposits grew 11% over the previous year and 3% sequentially.

Axis Bank crossed 1.9 million customers on WhatsApp banking within nine months of launch. The bank partnered with BharatPe to expand its merchant acquiring business and launched a wide range of open API or application programming interface banking solutions, it said in a statement.