BENGALURU (Reuters) -India’s Axis Bank reported a bigger-than-expected rise in second-quarter profit on Thursday, helped by higher core lending income.
The country’s fourth-largest private lender by market capitalisation 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.
Net interest income, the difference between interest earned and paid, rose 9.5% to 134.83 billion rupees.
However, net interest margin (NIM) – a key gauge of profitability for banks – shrunk to 3.99% during the quarter from 4.05% last year, and 4.11% in the previous quarter.
Loans by Indian banks have been growing at double-digit percentages since April 2022, but 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 loans grew 11% while total deposits rose 14% in the 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 in a press release. 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)
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