Axis Bank Shares Surge Over 6%; Top Gainer on Sensex, Nifty

Axis Bank has rallied 6% to Rs 412 on the BSE in early morning trade after the bank reported a 15% year-on-year (yoy) jump in net profit at Rs 2,175 crore in the October-December quarter (Q3FY16) on the back of higher net interest income and other income. Absolute gross non-performing assets (NPAs) were at Rs.5,724 crore at the end of the December quarter compared with Rs.4,451 crore in the previous quarter.

The bank expects bad loan additions in the March quarter to be a higher-than-forecast Rs 1,300 crore.

Axis Bank “s third quarter profit and net interest income surpassed analysts” expectations on Wednesday but asset quality worsened.

The RBI has not commented specifically on the direction to lenders but has said it has been in talks with banks over the management of stressed assets. The bank has used Rs 220 crore for provisioning goal from its contingency pool.

Sridharan warned the bank will have to dip into the reserve again before times turn good.

“While the overall macro picture is strong, at a micro level, the fundamentals have not improved very much. As prudent bank we have made a decision to recognize the entire impact in this quarter itself”, said Jairam Sridharan, president and head retail lending, Axis Bank.

“While we are optimistic in the medium term about the initiatives that RBI and Government are making, and are hopeful that some of the green shoots will bloom, Q4 seems too early to call for the end of turbulent times”.

Net interest income (NII), which is the difference between interest earned on loans and that paid on deposits, for the third quarter stood at Rs4,162 crore, up 16 per cent from Rs3,589.56 crore a year ago. 65 on the BSE, down 1.13 per cent from its previous close.