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Thursday, April 22, 2010

Loan growth back at Axis Bank

Axis Bank Ltd’s earnings per share for the fourth quarter came in at Rs18.57, Rs2.59 per share more than in the December quarter. Net profit for the quarter was at Rs764.87 crore, up 31.55% year-on-year (y-o-y), despite trading income falling to Rs102 crore from Rs166 crore in the year-ago period.

How was this achieved? Net interest income grew 41.4% y-o-y, on the back of a 28% growth in advances and an expansion in margins. Net interest margins (NIM), which were 3.37% in the fourth quarter of FY09, expanded to 4.09%, even higher than the 4% NIM in the December quarter. The margin expansion was driven by a higher proportion of low-cost current and savings account (Casa) deposits, lower term deposit costs and the equity issue last September. Fee income grew at 17% y-o-y. Even so, growth in operating profit was a somewhat subdued 21%. Lower provisions, though, bolstered the net profit.

How has the bank done vis-à-vis the December quarter? What is remarkable has been the business growth, both in advances and in deposits. Loans outstanding at the end of the March quarter was 28% higher than a year ago. In contrast, loans outstanding at the end of December 2009 was 12.5% higher than a year ago. Put another way, loan outstandings rose by 23% between December 2009 and March 2010. After a short hiatus, loan growth is back at Axis Bank. The balance sheet expanded 20% during the quarter. Deposits, too, grew substantially and the credit-deposit ratio at the end of March was 73.8%. As mentioned earlier, NIM have continued to expand. Casa deposits moved up from 46% to 46.7% of total deposits.

How was this achieved? Net interest income grew 41.4% y-o-y, on the back of a 28% growth in advances and an expansion in margins. Net interest margins (NIM), which were 3.37% in the fourth quarter of FY09, expanded to 4.09%, even higher than the 4% NIM in the December quarter. The margin expansion was driven by a higher proportion of low-cost current and savings account (Casa) deposits, lower term deposit costs and the equity issue last September. Fee income grew at 17% y-o-y. Even so, growth in operating profit was a somewhat subdued 21%. Lower provisions, though, bolstered the net profit.

How has the bank done vis-à-vis the December quarter? What is remarkable has been the business growth, both in advances and in deposits. Loans outstanding at the end of the March quarter was 28% higher than a year ago. In contrast, loans outstanding at the end of December 2009 was 12.5% higher than a year ago. Put another way, loan outstandings rose by 23% between December 2009 and March 2010. After a short hiatus, loan growth is back at Axis Bank. The balance sheet expanded 20% during the quarter. Deposits, too, grew substantially and the credit-deposit ratio at the end of March was 73.8%. As mentioned earlier, NIM have continued to expand. Casa deposits moved up from 46% to 46.7% of total deposits.

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