India's Axis Bank posts Q2 profit beat on strong credit demand
Adds management comments in paragraphs 7-8
By Nishit Navin
BENGALURU, Oct 17 (Reuters) -India's Axis Bank AXBK.NS reported a higher-than-expected second-quarter profit on Thursday, helped by an increase in core lending income.
The country's fourth-largest private lender by market value said its standalone net profit, which excludes its subsidiaries, rose 18% to 69.18 billion rupees ($823.25 million) for the quarter ended Sept. 30.
Analysts had expected a profit of 65.27 billion rupees, according to estimates compiled by LSEG.
Axis Bank's net interest income, the difference between interest earned and paid, rose 9.5% to 134.83 billion rupees.
Loans by Indian banks have been growing at double-digit percentages since April 2022. That has made lenders scramble for deposits, forcing them to either slow their loan growth or pay higher interest on deposits, and weighing on margins.
Axis Bank's net interest margin (NIM), a key gauge of profitability for lenders, shrunk to 3.99% during the quarter from 4.11% last year, and 4.05% in the previous quarter.
Chief Financial Officer Puneet Sharma said the sequential decline in NIM was primarily due to a one-time tax gain made in the previous quarter.
The bank said its margin, excluding the one-time impact, was broadly maintained as deposit costs remained stable when compared with the prior quarter.
Axis Bank's net loans grew 11%, while total deposits rose 14% in the second quarter.
Gross non-performing assets ratio, a key gauge of lenders' asset quality, improved to 1.44% at the end of September, compared with 1.54% three months earlier, and 1.73% a year ago.
However, provisions for bad loans nearly tripled to 22.04 billion rupees as the bank set aside additional funds worth 5.2 billion rupees as a "prudent" measure, it said.
Axis Bank's shares ended 1.9% lower ahead of the results amid a weak broader market.
Reporting by Nishit Navin; Editing by Janane Venkatraman and Shounak Dasgupta
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