Axis Bank Q3 earnings: Net Profit rises 4%, NII up over 9%, misses estimate by a whisker

The Mumbai-based private bank reported a standalone net profit of ₹6,071 crore in the three months ended 31 December, compared to ₹5,853 crore a year ago. Analysts, on average, had expected a profit of ₹5,991 crore. The standalone numbers do not include the business of the bank's subsidiaries.

Axis Bank, India's fifth-largest by market capitalisation, reported a 9.4% year-on-year growth in net interest income - the difference between interest earned and paid out - to ₹12,532 crore.

With the costs of deposits rising amid tighter banking system liquidity conditions, most Indian banks reported a drop in lending margins - a key barometer of profitability - in the fiscal third quarter.

Axis Bank's net interest margin (NIM) shrunk sharply to 4.01% from 4.26% a year ago and 4.11% in the prior quarter. Last week, HDFC Bank and ICICI Bank - two of India's largest private lenders - also reported weak margins.

Axis Bank's gross non-performing asset ratio (NPA), a key measure of asset quality, improved to 1.58% as of December-end from 1.73% at the end of the prior three months. Loans grew 22% year-on-year, and deposits rose by 18%. Provisions for bad loans dropped 28.5% year-on-year to ₹1,028 crore.

During the quarter, the bank made full provision for its entire investments towards alternative investment funds aggregating ₹182 crore, in line with the central bank's mandate.