By Nishit Navin and Siddhi Nayak
BENGALURU/MUMBAI (Reuters) -Indian private lender Axis Bank on Thursday beat fourth-quarter profit estimates and expressed confidence about its retail loan growth improving in the upcoming quarters.
The bank’s loans grew 8% in the quarter ended March from a year ago, with retail loans expanding 7%.
Peers such as ICICI Bank reported a 14% loan growth for the same period.
Tighter guardrails by India’s central bank and increased delinquencies on unsecured loans had led lenders to slow down credit growth in this segment.
“The actions that we took in terms of the credit tightening are actually giving us good results on the unsecured (retail) portfolio,” said Arjun Chowdhry, an executive at Axis Bank.
“On the secured portfolio, we continue to hold up very well.”
Axis Bank is “quite comfortable” with the retail loan growth forecast going into the next couple of quarters, even as corporate loan growth will be “muted” on tariff-related uncertainty, it said, without divulging specific targets.
The bank reported standalone quarterly net profit of 71.18 billion rupees ($834.7 million). Analysts on average had expected profit of 66.6 billion rupees, according to LSEG-compiled data.
Net interest income, the difference between interest earned on loans and paid on deposits, rose 6% to 138.11 billion rupees.
Net interest margin was at 3.97%, compared with 4.06% a year ago and 3.93% in the previous quarter.
Even though the cost of deposits has started trending downwards following two rate cuts by the central bank, there is “still some way to go,” CEO Amitabh Chaudhry said.
Axis Bank’s gross non-performing assets ratio – bad loans as a percentage of total loans, a key gauge of lenders’ asset quality – was at 1.28% at March-end, down from 1.46% in the earlier quarter.
Provisions and contingencies, or funds kept aside for potential bad loans, rose 14% to 13.59 billion rupees from a year, but fell 37% from the previous quarter.
($1 = 85.2720 Indian rupees)
(Reporting by Nishit Navin in Bengaluru and Siddhi Nayak in Mumbai; Editing by Mrigank Dhaniwala and Shreya Biswas)
