Axis Bank in fine form

Beating estimates

Mumbai, July 22: Axis Bank today beat market expectations and reported a 27 per cent rise in net profit at Rs 942.35 crore, but the Union Bank of India disappointed with a 22.77 per cent fall in profits — underscoring a stark divergence in the performance between the private and state-owned banks.

Axis Bank, the country’s third-largest private bank, saw profits leap from the year-ago level of Rs 741.88 crore on the back of a surge in fee income even as the bank’s provisions also dropped during the period. Analysts had expected the bank to post a profit of around Rs 900 crore.

The bank said its net interest income (NII) rose nearly 14 per cent to Rs 1,724 crore against Rs 1,514 crore in the year-ago period. NII, which is interest earned minus interest paid, represents the core income of a bank.

The jump in its NII was a surprise since banks have been paying higher interest rates on deposits during the period. This impacted its net interest margins, which came down to 3.28 per cent in the first quarter compared with 3.44 per cent in the preceding three months. On the other hand, fee income rose 42 per cent over last year to Rs 1,057 crore (Rs 743 crore).

Profits at the bank were also bolstered by provisions dropping to Rs 175.84 crore from Rs 333 crore last year.

The Union Bank of India reported disappointing results as net profits dropped to Rs 464 crore from Rs 601 crore. The decline was mainly because of an increase of Rs 214 crore in its provisioning for NPAs and restructured accounts. The period saw the bank’s gross NPAs rise to 2.57 per cent over 2.19 per cent in the same period last year.