What is your view on the Axis Bank results for the Dec-21 quarter?
Answer
Answer
Axis Bank reported stellar numbers in Q3 as it saw a sharp 200% rise in profits for the Dec-21 quarter. This was supported by lower provisioning for loan losses in the third quarter. Axis Bank saw all-round growth across verticals like treasury, retail banking and corporate banking. Here is a summary of the financials of Axis Bank.
Axis Bank Ltd
Rs in Crore
Dec-21
Dec-20
YOY
Sep-21
QOQ
Total Income
₹ 22,091
₹ 18,991
16.32%
₹ 20,967
5.36%
Operating Profit
₹ 6,665
₹ 5,563
19.80%
₹ 6,304
5.72%
Net Profit
₹ 3,957
₹ 1,318
200.24%
₹ 3,388
16.80%
Diluted EPS
₹ 12.86
₹ 4.30
₹ 11.02
Operating Margins
30.17%
29.29%
30.07%
Net Margins
17.91%
6.94%
16.16%
Gross NPA Ratio
3.17%
3.44%
3.53%
Net NPA Ratio
0.91%
0.74%
1.08%
Return on Assets (Ann)
1.30%
0.48%
1.19%
Capital Adequacy
17.44%
18.68%
19.23%
Let me talk about revenues first. Axis Bank reported 16.3% rise in total revenues on a yoy basis at Rs.22,091 crore. There was positive growth across treasury, wholesale banking and retail banking verticals in Q3. Revenues of Axis Bank also grew 5.36% on sequential basis, i.e. over the previous quarter, showing favourable short term momentum.
Operating profits of the corporate banking and treasury verticals improved further. Retail banking vertical recovered from an operating loss to operating profits. The provisions for doubtful assets in Dec-21 quarter was 64% lower yoy at Rs.1,363 crore and that had the biggest impact on profit growth.
Operating profits were up 19.80% yoy for Axis Bank at Rs.6,665 crore. Net interest income or NII rallied 17% yoy to Rs.8,653 crore. However, the spread captured by the Net interest margins or NIM were sequentially flat at 3.53%. The NIMs are surely getting better but still fall about 50 bps short of the NIMs of ICICI Bank and HDFC Bank.
For Q3, Fee income grew 15% at Rs.3,344 crore while retail fees grew 16% and retail card fees grew 21% on a yoy basis. Loan loss provisions narrowed very sharply from Rs3,779cr in the Dec-20 quarter to Rs1,363cr in Dec-21 quarter. Operating margin expanded from 29.29% in Dec-20 to 30.17% in Dec-21 quarter i.e. by around 88 bps.
Net profits got a big yoy boost by 200% at Rs.3,957 crore. The net profit boost was triggered by better interest spreads, higher non-interest income and lower provisioning for loan losses. That Net margins improved from 6.94% to 17.91% yoy. Gross NPAs at 3.17% are in control with net NPAs at 0.91% hinting at substantially provisioned potential losses.