India's Axis Bank misses profit forecast on lower trading income, approves $2bn equity fundraise

India’s Axis Bank reported a marginal drop in fourth-quarter profit on Saturday, hurt by lower income from treasury operations and higher provisions, and missing analyst estimates for a gain.

The bank’s board also approved a fundraising of up to 200 billion rupees ($2.12 billion) by issuing equity shares or other similar instruments, subject to regulatory approvals.

The country’s third-largest private lender by market capitalisation posted a 0.7% fall in standalone net profit to 70.71 billion rupees for the January-March quarter, from 71.18 billion rupees a year earlier.

Analysts had expected a profit of 73.16 billion rupees, according to data compiled by LSEG.

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Treasury operations’ pre-tax profit dropped nearly 77% to 3.03 billion rupees as bond yields rose during the quarter. The Reserve Bank of India’s curbs on forex arbitrage further constrained trading income.

Provisions and contingencies more than doubled to 35.22 billion rupees compared to last year due to a voluntary exercise and were not tied to any falling asset quality or other adverse concerns, Axis said in its earnings statement.

Axis Bank’s loans grew 19% year-on-year as of the end of March, while deposits rose 14%.

Credit growth, which moderated over several quarters last year, rebounded in the third quarter to the end of December, supported by sweeping consumption tax cuts and easing inflation.

That momentum has carried into the current quarter as loan growth remained resilient, driven by steady demand across retail and micro, small and medium enterprises (MSME), while working capital also picked up, marking a recovery in corporate loans. Last week, larger peers HDFC Bank and ICICI Bank beat quarterly profit estimates aided by strong loan growth.

Net interest income - the difference between interest earned on advances and paid on deposits - rose 5% to 144.57 billion rupees.

Axis Bank’s gross non-performing asset ratio was 1.23% at the end of March, compared with 1.40% in the December quarter.