Axis Bank Q2 earnings soared 70% on-year to Rs 5,330 crore, beats estimates

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Axis Bank Q2 earnings

Axis Bank reported its July-Sep 22 results on Thursday evening post-market close. The share price closed 0.68% lower. Axis Bank shares have given over 18% returns to investors in 2022 and close to 70% in the last five years. 

Key highlights of Axis Bank's earnings: 

Below are details from Axis Bank's Q2FY23 quarterly results:

Profits beat estimates: Axis Bank posted a 70% year-on-year (YoY) increase in its net profit to post its highest quarterly profit of Rs 5,330 crore for the quarter that ended September 2022. It is above the Edelweiss expectation of Rs 4,690 crore. Sequentially, the net profit increased from Rs 4,125 crore.

Net interest income rises: Axis Bank's primary business is to borrow money and lend the same at a higher rate. The income generated from the difference between the two is known as net interest income. Net interest income (NII) for the bank rose 31% year-on-year to Rs 10,360 crore compared with analysts' estimate of Rs 10,180 crore. Sequentially, the NII increased by 10%. Net interest margin (NIM) for the September quarter came in at 3.96%, up 57 basis points year-on-year and 36 basis points sequentially.

Other Income: Bank's Fee income for Q2FY23 increased 20% year-on-year to Rs 3,862 crore. Retail fees grew 28% year on year and constituted 68% of the Bank’s total fee income. Retail cards and payments fees increased by 53% on-year. The Corporate & Commercial banking fees together reported tepid growth of 5% compared to the year-ago period. Overall, non-interest income (comprising fee, trading profit, and miscellaneous income) for Q2FY23 stood at Rs 3,941 crore.

NPAs: Gross NPA ratio fell to 2.50% for the Q2FY23, a decline of 26 basis points sequentially and 103 bps on year. The net NPA ratio improved by 13 basis points QoQ and stood at 0.51%. 

Slippages: Slippages are when a standard asset becomes an NPA for the bank as the borrower is not paying interest for more than 90 days. Gross slippages during the September quarter were Rs 3,383 crore, compared to Rs 3,684 crore in Q1FY23 and Rs 5,464 crore in Q2FY22. Recoveries and upgrades from NPAs during the June quarter were Rs 2,826 crore.

Provisions: Specific loan loss provisions for Q2FY23 were Rs 751 crore compared to Rs 927 crore in Q2FY22. The bank has not utilized Covid provisions for the September quarter. It held cumulative provisions (standard + additional other than NPA) of Rs 11,625 crore at the end of Q2FY22. Credit costs for the quarter that ended September stood at 0.38%, declining by 16 bps year-on-year.

Deposits and Advances: Total deposits grew by 10% year-on-year on a quarterly average balance (QAB) basis and by 13% year-on-year on a period-end basis. Savings account deposits grew 14% on-year and 3% sequentially. Current account deposits increased by 11% on-year.

The bank’s advances grew 18% year-on-year to Rs 7.31 lakh crore at the end of the September quarter. Retail loans grew by 22% year-on-year and 3% sequentially to Rs 4.23 lakh crore and accounted for 58% of the net advances of the bank.

CASA: CASA capital is the cheapest source of capital for every bank. If the number is high, it means that banks can earn more profit. The ratio of current account and savings account deposits stood at 46%, up 172 basis points compared to a year ago. 

Network: Axis Bank had a network of 4,760 domestic branches and extension counters situated in 2,676 centers compared to 4,679 domestic branches and extension counters situated in 2,658 centers compared to the year-ago period. For the quarter ending June, the Bank had 10,043 ATMs and cash recyclers spread across the country. 

Updates from Key Subsidiaries 

  • Axis AMC - Axis AMC’s average AUM for the September quarter grew by 4% year-on-year to 2.48 lakh crore. Its Q2FY23 PAT grew 28% on-year from Rs 95 crore to Rs 74 crore in Q2FY23.
  • Axis Finance - Axis Finance remains well-capitalized with a Capital Adequacy Ratio of 19.6%. The asset quality metrics for the September quarter remained stable with net NPA at 0.42%. Axis Finance H1FY23 PAT was Rs 210 crore, up 53%. Axis Capital - Axis Capital completed 11 Investment Banking transactions including 5 equity market transactions in Q2FY23. Its PAT for H1FY23 stood at Rs 64 crore.