India’s Axis Bank Q2 profit beats view on robust loan growth

BENGALURU (Reuters) -India’s Axis Bank reported a bigger-than-expected rise in second-quarter profit on Wednesday, helped by strong growth in loans.

The private lender’s standalone net profit climbed 10% to 58.64 billion rupees ($705.2 million) in July-September, beating expectations of 56.76 billion rupees, per LSEG data.

The standalone numbers do not include the business of subsidiaries.

Loan demand stayed strong as an uptick in consumer spending helped drive retail credit.

“With the upcoming festivities, we are already seeing a surge in demand, which augurs well for business,” the Mumbai-based bank’s CEO Amitabh Chaudhry said in a statement.

The bank is not seeing a build-up of risk in its personal loan portfolio and expects to continue growing in this segment, Chaudhry said in a media call.

About 83% of the bank’s personal loans go to existing customers, said the lender, which does not give out loans to the riskier segment of loans under 50,000 rupees.

The bank is seeing strong demand for loans from corporate clients, including for capital spending, it said.

Its asset quality improved, with gross non-performing assets ratio easing to 1.73% from 1.96% in the last quarter.

Provisions and contingencies – funds set aside to cover loan losses – fell 21.2% from the previous quarter to 8.15 billion rupees.

Net interest income – the difference between interest earned and interest expended – rose 19% year-over-year to 123.15 billion rupees.

Net interest margin, a barometer of a bank’s profitability, was 4.11%, up 15 basis points from a year ago and up 1 basis point from the earlier quarter.

Indian banks have experienced margin pressure in the last two quarters as deposits were re-priced with a lag following the 250-basis-point rise in policy interest rates since May 2022.

The country’s top lender HDFC Bank reported a drop in margins earlier this month, while IndusInd Bank, ICICI Bank, and Kotak Mahindra Bank reported second-quarter profit gains. ($1 = 83.1450 Indian rupees)

(Reporting by Sethuraman NR and Varun Vyas in Bengaluru; Editing by Mrigank Dhaniwala)