Buoyed by a hefty growth in fees and trading incomes, the country’s third largest private sector lender Axis Bank On Friday reported a 63.23 per cent jump in its net profit at Rs 500.86 crore for the quarter ended December 31, 2008, as compared to Rs 306.83 crore for the corresponding quarter last year.

Axis Bank, which is the first lender to announce its third-quarter results, said that its fee income for the October-December period rose by about 57 per cent at Rs 618.91 crore as against Rs 395.05 crore in the same quarter last year.

“It has been a difficult quarter for banks. We have managed to maintain our cost to income ratio at the minimum possible level. While interest rates were going up, we ensured that the share of non-performing assets (NPAs) are kept as low as possible. Our fees income contributed the most to our third-quarter profit,” said Axis Bank Chairman P J Nayak.

The bank’s total income during the October-December quarter increased by 62.29 per cent to Rs 3,716.94 crore as against Rs 2,290.24 crore for the same quarter a year ago.

At a time when the Indian banks are worried about the rising NPAs in their loan books, Axis Bank said its net NPA was recorded at 0.39 per cent for the third quarter as compared to 0.42 per cent during the corresponding three months last year. The net NPAs for the bank stood at Rs 341.94 crore for the third quarter as against Rs 234.26 crore during the quarter ended December 2007.

The bank’s net interest margin (NIM), which is the main yardstick to assess a lender’s profitability, was estimated at 3.12 per cent for the third quarter, a deterioration from 3.91 per cent during the same period last year. Nayak, whose term comes to an end in July 2009, said that the NIM came under pressure due to an overshoot in interest rates during October and November. He expected the NIM to remain between 3.25 per cent and 3.5 per cent for the fourth quarter.

The capital adequacy ratio (CAR) for the bank dropped to 13.84 per cent during the third quarter, as compared to 16.88 per cent for the corresponding quarter last year. The bank said its CAR is likely to remain at 12-14 per cent for the next 12-18 months. The bank raised Rs 1,500 crore in November 2008 by way of subordinated debt, which enhanced the bank’s tier-II capital to 4.38 per cent for the quarter as against 4.3 per cent during the same period last year.

The bank’s retail advances grew by 30 per cent to Rs 15,616 crore during the third quarter as against Rs 12,009 crore in the corresponding period a year ago.

“We expect our retail advances to grow at 30 per cent during the fourth quarter. Our corporate advances are estimated to grow at 35-40 per cent for the coming quarter and for the 12 months,” said Nayak.

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