The Hindu Business Line : ‘Other income’ boosts Axis Bank Q2 net 32%

Mumbai, Oct. 12 Net profit of Axis Bank grew by 32 per cent to Rs 531.64 crore for the second quarter ended September 30, over the same period last year, aided mainly by increase in other income and reduction in cost of funds.

Increase in current and saving deposits helped the bank cut cost of funds to 5.41 per cent (6.08 per cent) and also post a healthy growth in net interest income, Mr Somnath Sengupta, Executive Director and Chief Financial Officer, told Business Line.

Growth areas

“Both fee and trading income within other income saw good growth. We had a miscellaneous income of Rs 123 crore, recovered from written-off loans,” he said.

Trading profits in the second quarter were lower than the first quarter of this fiscal due to hardening of bond yields.

In the first quarter trading profit was Rs 326 crore, while in the second quarter it was Rs 224 crore.

In the second quarter of last fiscal, trading profits were Rs 36 crore.

Axis Bank saw a muted growth of 7 per cent in retail advances because it was selective with unsecured loans.

Also, the base of retail loans was higher last year, Mr Sengupta said. This year the bank will add 200 branches, of which 55 were opened in the second quarter.

The target is to add 200 branches next fiscal as well.

Referring to business growth Mr Sengupta said, “Loan growth is unlikely to cross 20 per cent this year going by the current credit offtake. Next year we should see higher growth at around 25 per cent. Deposit growth is also likely to be along the same lines at 25 per cent.”

Within the retail segment, the bank is expecting mortgages to grow the fastest.

Other sectors that are likely to see good growth include infrastructure and SME.

To seek RBI licence

Axis bank has also decided to set up a non-banking finance company as subsidiary.

The bank’s board on Monday approved the proposal and would be shortly applying to the Reserve Bank of India for licence, Mr Sengupta said.

One of the focus areas would be infrastructure lending, as the bank has an expertise in that segment, he added.

Shares of Axis Bank closed at Rs 1,012.75 on the BSE on Monday, up 1.66 per cent from the previous close of Rs 996.20.

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