Indian Banks are facing a tough environment,Axis BankchiefAmitabh Chaudhrysignalled on Thursday. Chaudhry also said that given the current set of challenges over deposit growth and asset quality, the bank has delivered steady September quarter earnings.. “The current conditions present a lot of variables which are tough,” said Amitabh Chaudhry, MD, Axis Bank. “While we say we have excess liquidity on the other side the deposit rates are not coming down. There are clear guidelines in place on what credit-to-deposit ratio you can have. We are seeing some worsening of asset quality in some of the unsecured and some other asset classes. The interest rates demanded by good customers are also not increasing. In such an environment to be able to deliver a steady NIM, improve asset quality and take prudent provisions puts us in a different light.”. Axis Bank reported a 18% rise in September quarter net profit to Rs 6,918 crores on the back of strong trading income and low operating expenses. A Bloomberg analyst poll had pegged profits at Rs 6370 crore. The bank had reported profits of Rs 5863 crore.. Net interest income, a key source of income for banks grew to Rs 13,483 crore a growth of 9% year-on-year. Net interest margins for the September 2024 quarter on year basis eased to 3.99% versus 4.11% in the quarter last year.. “It was a low quality beat (on profit) with a still weak asset quality picture, sharply higher slippages and loan loss provisions, despite the sequential improvement in credit costs, a tepid loan growth and a sequential NIM decline,” said Pranav Gundlapalle, head, India financials at Bernstein. “Loan growth was lower than the system growth, with a broad based slowdown across the book. Deposit growth continued to be led by term deposits with CASA growth remaining weak.”. The gross non-performing asset ratio (GNPA) eased to 1.44% for the quarter under review versus 1.73% in the year ago period. The net NPA ratio also came down marginally to 0.34% versus 0.36% a year ago.. Provisions rose to Rs 2204 crores a growth of 170% in the September 2024 quarter versus Rs 814 crores in the same period last year. Within that specific loan loss provisions stood at Rs 1,441 crores. Fresh slippages rose to Rs 4443 crore from Rs 3254 crore in the year ago quarter.. The bank’s total credit grew 11% on year to Rs 10 lakh crore, with the retail segment being the biggest contributor recording a 15% year-on-year growth taking the total book to Rs 5.98 lakh crore, accounting for 60% of the net advances. In terms of segmental on year growth home loan book rose 5%, personal loans grew 23% and credit card advances grew 22%.. Loans to the SME segment also saw a healthy 16% growth to Rs 1.1 lakh crore. While loan growth to the corporate segment remained moderate with a 3% growth.. The private lender’s deposits grew 14% on year to Rs 10.37 lakh crore. Within that term deposits grew 21% to Rs 6.24 lakh crore. While deposits in current accounts grew 13% on year to Rs 1.25 lakh crore and deposits in savings accounts saw a tepid growth of 1% on year.. “Loan to deposit growth remained muted and credit to deposit ratio continues to remain elevated at 92%,” said Rahul Malani, Equity Research Analyst at Sharekhan by BNP Paribas. “On the asset quality front, although net slippages were lower, write-offs were significantly higher mainly from the unsecured retail segment.”. (You can now subscribe to our Economic Times WhatsApp channel)
