Axis Bank bank share Axis Bank

In the December quarter, Axis Bank reported a 24% rise in profit to Rs. 1,102.27 crore on the back of a 45% rise in income to Rs. 7,206.77 crore. Its deposits grew twice as fast as the industry average due to a sharp rise in savings and current accounts as well as retail term deposits. Loans grew 20% with the retail segment driving this growth. Though retail lending constitutes a little over a fifth of the bank’s total loan book, Axis Bank is counting on this segment to drive growth in the coming quarters as well, given the challenges in the corporate sector and a rise in bad loans.

The bank which now earns nearly half its income by lending to the corporate sector increased its net interest income by 23%, consistent with the rise in September 2011. This is the income it earns after interest payments. Income from fees rose 26% with services to large and medium corporate credit segment leading growth. The performance would have been even better had fee income from equity markets not contracted. If market conditions do not improve significantly, a similar performance can be expected in Q4 as well.

Axis Bank Ltd (updated - 24 Jan 2012)
The performance of the third largest private lender was in line with expectations in the quarter to December 2011 but the pressure on margins will continue in the next few quarters. The bank management has indicated that and though growth in income has been stable, earnings growth has been on the decline over the past six quarters. The quarter to March 2012 may be no different.

Net interest margin fell 60 bps to 3.7% while the cost of funds rose by 155 bps. Given the current credit environment, the NIM may contract even more, but is likely to remain within 3.3-3.5%, which the management is comfortable with.

Axis Bank trades at a price to book multiple of 2.2 times which is expensive compared with BoB and BoI.
Source - Economic Times

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