Axis Bank ’s net profit between October to December jumped 225% on year to ₹3,614 crore led by strong loan growth in both retail and corporate loan segments.- The bank continues to focus on the retail banking segment with ‘limited impact of the virus’ said Amitabh Chaudhry, MD & CEO at Axis Bank.
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Following this, today (January 25) shares of Axis Bank were up 4% at ₹733 per share during early morning trade.
Here are three reasons for the significant growth in profitability:
Not only bad loans but fear of bad loans for the bank has also come down
A year ago when COVID-19 has started showing signs of danger, bad loans were a cursed word for banks who were scared to offer loans over fear of default. A year has passed and the virus has not gone away, but people seem to have found a way to live with it.
Last three months’ data show that Axis Bank's non-performing loans have come down sharply, which means people are paying back on time. And thus the bank has also lowered its provisions on fear of default. This indicates an overall improvement in the economic situation.
Another reason is the strong loan growth both in retail and corporate lending
The lender gave out more loans in the December quarter and even in the last five months while COVID-19 restrictions were still in place in some states. This is also because of the government’s push to urge banks to lend more under its ‘Atmanirbhar Bharat’ campaign right after the pandemic.
Further, the bank said it will continue to focus on retail banking as the economy turns around. “In Retail, we continue our growth focus, with the economy turning around and limited impact of the virus. We are optimistic about the future and plan to leverage every sustainable growth opportunity that is available to us,” said Amitabh Chaudhry, managing director (MD) and chief executive officer (CEO) at Axis Bank.
The bank has spread its business across segments like mutual fund, insurance, broking and advisory business, which is also contributing good money to the overall kitty.
Last year during the same period the bank earned ₹507 crore from its subsidiaries, which has now grown by 66% to ₹843 crore in the October-December quarter of financial year 2022.
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