Axis Bank Q4 earnings beat estimates but asset quality is weak - Firstpost

Axis Bank shares  rose 3.7 percent after the bank posts better-than-expected March quarter results. Results  showed net profit stood at Rs 1555 crore against estimates of Rs 1277 crore. While the numbers were strong, sustainability is key for the stock performance. The banks net interest income grew to Rs 2,664 crore, up 24.16 per cent, from Rs 2,146 crore, in the same period a year ago. Other income was up 26.43 per cent to 2,007 crore. "Healthy growth in NII and other income has contributed to the net profit rise," Somnath Sengupta, Executive Director Axis Bank  said in a conference call. Reuters Other banking shares also rose with the NSE banking index trading up 1.3 percent. SBI rose 1.3 percent, Punjab National Bank  was up 1.3 percent, Union Bank gained 3 percent. However, despite strong earnings, the bank's asset quality remains weak. The bank's total  impaired assets for the quarter stood at Rs 1190 crore, higher than the guidance of Rs 1,000 crore.  Brokerage Jefferies expects this uptrend to be the new normal expectation given the weak economic scenario."Unless we see asset quality situation improve, we believe the headwinds to stock performance will remain," it said in a report. Iron & steel, engineering and infrastructure sector were the key contributors to the restructuring for the quarter. Net outstanding restructured assets stood  2.2% of gross loans. The brokerage listed three downside risks to the stock. 1. Retail asset delinquencies 2.  deterioration in economic condition 3. large scale asset quality worries. According to Morgan Stanley, the banks loan growth slowed to 16 percent year on year and is likely to stay weak in the current macro backdrop. The brokerage has an underperform rating on the stock as it "Expects core operating profit growth to remain weak as corporate book stays anemic." via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNHfitauO62j-KTo-cPw6DGBIEfzRg&url=http://www.firstpost.com/business/axis-bank-q4-earnings-beat-estimates-but-asset-quality-is-weak-727119.html

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