* Profit 12.25 bln rupees, down 43 pct y/y, vs 9.51 bln estimate
* Bad loan ratio narrows quarter-on-quarter
* Forecasts credit costs to fall in current financial year (Adds CFO comments, details)
By Devidutta Tripathy
MUMBAI, April 26 (Reuters) - Axis Bank Ltd, India’s third-biggest private sector lender by assets, reported a smaller-than-expected 43 percent fall in fourth-quarter profit and said the worst was over in terms of bad loans that have surged in the past year.
The Mumbai-based lender said net profit was 12.25 billion rupees ($191 million) for the three months to March 31, ahead of analysts’ estimates of 9.51 billion rupees.
Like many other Indian lenders with exposure to troubled sectors such as infrastructure, metals and power, Axis Bank has seen its bad loans more than triple in the past year.
Finance chief Jairam Sridharan said the company remained cautious as there were still challenges in resolution of bad loans.
“I think the worst is behind us,” Sridharan told reporters on a conference call after the results.
“However, there are some challenging times still ahead of us. We should recognise that Q4 does tend to be seasonally fairly strong for recoveries, etcetera. So I wouldn’t blindly extrapolate all the outcomes of the Q4 into the next year.”
The bank guided that its provisioning costs for the new financial year that began in April would be in a range of 175-225 basis points, lower than 282 basis points reported in the previous fiscal year.
In the March quarter, it added 48.1 billion rupees of bad loans to its existing pile taking the total to 212.8 billion rupees. But bad loans as a percentage of total loans narrowed to 5.04 percent, compared with 5.22 percent in December.
The bank’s “watch list” of potential troubled loans stood at 94.4 billion rupees as at end-March, down 15 percent from the previous quarter.
Sridharan did not give a specific guidance for loan growth in the current fiscal year but said they expected to grow 5 percentage points higher than the sector’s credit growth. Last fiscal year Axis Bank’s loans grew 10 percent, higher than the sector growth of about 5 percent.
Axis Bank in February dismissed market speculation that it could be a takeover target by smaller rival Kotak Mahindra Bank .
Kotak would need the backing of the Indian government to seal any takeover of Axis, which is about 30 percent owned by state-owned insurance companies and a government agency.
Ahead of the results, Axis Bank shares closed 0.2 percent higher in a Mumbai market that gained 0.5 percent. ($1 = 64.1150 Indian rupees) (Reporting by Devidutta Tripathy; Editing by Randy Fabi/Keith Weir)