Axis Bank profit climbs 38% but margins and costs weigh on the quarter

what happened

Axis Bank, India's third-largest private lender, reported results for the quarter ended 30 September, according to TradingView, which cites Mint. Net profit reached Rs 7,003 crore, up 38% from a year earlier but 2% lower than in the June quarter. Earnings were helped by a 52% annual drop in provisions to Rs 1,694 crore and by net interest income that climbed 12% to Rs 15,371 crore.

Operating costs, however, grew 9% year on year and 11% sequentially to Rs 10,819 crore. The net interest margin fell to 3.36% from 3.46%. Chief financial officer Rajeev Mantri linked the decline to foreign currency deposits raised under a special Reserve Bank of India window, which he said cut the margin by roughly 11 basis points. Total deposits rose 20.7% annually and advances rose 23%. The bank declined to give loan growth guidance, pointing to a high base last year and inflation pressures.

why it matters

For investors, the key question is whether cost growth keeps outpacing income and whether margins recover as the bank redeploys these deposits. Shares closed Friday at Rs 1,290 on the National Stock Exchange, up 0.2%, so the stock is trading within a sector that is watching margin trends closely.

market impact

Indian banks: thinner margins and higher costs weigh on Axis Bank shares and the sector

tags

instruments