Axis allays Male loan fears after profit rises 22%

Axis Bank on Tuesday said it is pursuing all options for recovering money from the Male International Airport project that ran into trouble in the third quarter of this fiscal.

“As far as the transaction is concerned, we clearly have our rights under various financing agreements in terms of the project,” Somnath Sengupta, executive director, Axis Bank, said in an analyst call discussing third-quarter financial results. The loan continues to be performing and all obligations are still being met, he said.

The private sector lender reported an increase of 22% in net profit for the quarter ended December, at Rs1,347 crore, riding on healthy retail loan growth.

Lower provisions – at Rs387 crore – due to a writeback also helped.

Net interest income (NII), or the difference between interest earned and paid during the quarter, was up 16.6% year on year at Rs2,495 crore.

Net interest margin, or the NII expressed as a percentage of average assets held during the period, fell 18 basis points (bps) on year to 3.57%, but rose 6 bps sequentially.

The bank saw an annual growth of 17.16% in deposits and 20.68% in advances during the quarter.

Its retail loan portfolio grew at a healthy pace of 45%, making up 27% of the total loan book.

The lender indicated increased focus on the retail segment going forward.

On reduction of lending rates, the bank said it would wait for the third-quarter monetary policy review meeting on January 29, where the Reserve Bank of India is widely expected to cut policy rates by 25-50 bps.

“Unless our cost of funds comes down, our base rate won’t,” said Sengupta. “We need to wait and watch what all banks do if RBI cuts rates at the end of this month,” he added.

Axis Bank’s base rate stands at 10% now.

The bank restructured Rs368 crore worth of loans in the October-December period, taking the portfolio to Rs4,257 crore. The gross non-performing assets (NPA) ratio was stable at 1.1%, while the net NPA ratio fell 6 bps to 0.33% in the same period.