BENGALURU (Reuters) – India’s Axis Bank reported a smaller-than-expected rise in quarterly profit on Thursday, as loan growth slowed and it set aside more funds against potential bad loans.
The country’s fourth-largest private lender by market capitalisation said its standalone net profit – which excludes earnings of its subsidiaries – rose 4% to 63.04 billion rupees ($728.48 million) for three months to December-end.
Analysts had expected, on average, a profit of 65.16 billion rupees, according to estimates compiled by LSEG.
The lender’s provisions and contingencies, or funds kept aside for potential bad loans, more than doubled year-on-year to 21.56 billion rupees.
Indian lenders have been grappling with higher bad loans in segments such as microfinance and in the unsecured portfolio, forcing them to set aside more funds for potential losses.
Axis Bank’s gross non-performing asset ratio, a key gauge of lenders’ asset quality, was at 1.46% at December-end, compared with 1.44% three months earlier.
Net interest income – the difference between interest earned and paid – rose 9% to 136.06 billion rupees, lagging analysts’ expectations of 137.87 billion rupees, per data compiled by LSEG.
Indian lenders’ deposit growth has been slower than the rise in advances, forcing them to either ease loan growth or raise more deposits.
Axis Bank’s loans grew 9% year-on-year in the three months to December-end, slower than the 11% rise in the previous quarter. Its total deposits also grew by 9%.
The net interest margin, a key gauge of profitability, narrowed to 3.93% from 4.01% a year earlier, and 3.99% in the previous quarter.
($1 = 86.5350 Indian rupees)
(Reporting by Nishit Navin; Editing by Mrigank Dhaniwala)
