Axis Bank stock jumps 8% as Q2 profit beats estimates

Shares of private sector lender Axis Bank rallied over 8% to hit a fresh 52-week high in intraday trade on Friday after it reported strong growth in the bottom-line for the second quarter ended September 2022, driven by lower provisions and improvement in asset quality.

At the time of filing the report, the Axis Bank stock was trading 8.19% up at 893.90. The banking stock has risen 11.88% in the past week; 10.91% in the past month; 11.48% in the past six months; and 28.38% in the year-t-date period.

The country’s third largest private sector lender has reported a consolidated net profit of ₹5,625 crore, up 66% for the quarter ended September 2022, compared to ₹3,383 crore in the same period last year. On the standalone basis, the profit jumped 70% to ₹5,330 crore, from ₹3,133 crore in the year-ago quarter.

Amitabh Chaudhry, MD & CEO, Axis Bank said, “Over the past 12 months, we have made significant strides across every identified priority area. The focus on customer obsession and digitisation has got our acquisition engine humming. The core operating profits and margins have grown on the back of strong performance across business segments. We are building a high-quality, granular franchise with the customer at the centre, while extending our network and services to semi-urban and rural geographies to tap into the Bharat opportunity. We are excited about the future of Axis Bank. ”

The net interest income (NII), difference between interest revenues and interest expenses, grew 31% year-on-year to ₹10,360 crore, from ₹7,901 crore in the corresponding period last year. The net interest margin (NIM) stood at 3.96%, up 57 basis points as compared to the same period last year.

The bank’s core operating profit for the quarter grew 43% YoY and 19% QoQ to ₹7,802 crore. Operating profit for the quarter grew 30% YoY and 31% QoQ to ₹7,716 crores.

On the asset quality front, gross non-performing asset (GNPA) ratio declined to 2.50%, from 3.53% in Q2 FY22 and 2.76% in the June quarter of the current fiscal (Q1 FY23). Net non-performing assets (NNPA) as percentage of net advances more than halved to 0.51% in Q2 FY23 against 1.08% in the same period last year.

During the quarter under review, provisions fell to ₹550 crore against ₹1,735 crore a year ago. The lender’s provision coverage, as a proportion of gross NPAs stood at 80%, as compared to 70% in the year-ago period and 77% as at June 30, 2022.