Axis Bank on Tuesday said a massive 50 per cent rise in retail credit, coupled with strong 26 per cent rise in net interest income (NIM), pushed its net profit 22 per cent to Rs 1,154 crore in the first quarter ended June 30.

"We have had a good quarter in difficult times as we have been able to maintain asset quality and revenue growth, which came from large corporates, infra companies and retail segment which rose to record 50 per cent, constituting 24 per cent of the loan book," the city-based bank's Chief Financial Officer and Executive Director, Somnath Sengupta, said.

He further said the strong numbers were also helped by maintaining growth in revenues as well as network expansion, besides good credit demand from the farm sector. However, during the quarter, the bank saw its SME portfolio shrink to 13 per cent from 15 per cent a year ago.

He said this was not due to conscious decision but because the bank is always conscious about the SME sector. During the quarter, the banking sector grew at 16.5 per cent, but Sengupta said he is "hopeful of growing just above the industry level for the full fiscal."

Sengupta said, "during the reporting period we have been able to control the asset quality and going forward we don't have any reason to believe the asset quality will deteriorate further."

However, Sengupta admitted the bank had seen Rs 628 crore of assets being restructured during the quarter across the sectors, taking the cumulative value of recast assets to Rs 3,827 crore (1.95 per cent of gross customer assets).

Of the outstanding pool, assets of Rs 1,231 crore were displayed a satisfactory repayment track-record of two years. Adjusting for these assets, restructured assets would constitute 1.32 per cent of gross customer assets.

During the quarter, total income rose to Rs 7,818 crore from Rs 6,049 crore a year ago, while the core net interest income rose a healthy 26 per cent to Rs 2,180 crore. This helped the bank report a higher net interest margin (NIM), a key gauge of profitability, during the quarter to 3.37 per cent, up from 3.28 per cent in the same period of last fiscal.

Shares of Axis Bank closed at Rs 1,023.30, down 2.10 per cent over their previous close on the BSE. Asked whether the bank will cut base rate as its immediate rival HDFC Bank had done a fortnight ago, Sengupta answered in the negative.

He said interest rates will remain at the current levels as he does not "see any over-riding reason" for the central bank to reduce lending rates at the July 31 monetary policy. During the April-June period, the bank added 52 branches taking its network to 1,681 while its ATMs rose 413 to 10,377.

The bank saw its Casa (Current Account, Savings Account) portfolio rising 17 per cent with savings deposits constituting 23 per cent of the deposits and the current accounts' share was 8 per cent. Total assets rose 24 per cent Y-o-Y, net loans stood at 30 per cent and NIM rose 26 per cent, while other income, including fee and trading income, rose 14 per cent.

Net Non-Performing Assets (NPA) dipped to 0.31 per cent while gross NPA was under 1 per cent. Sengupta said the bank saw its cost of funds rise 0.25 per cent during the quarter.

Net interest income and other income grew 26 per cent and 14 per cent respectively, taking the net interest income to Rs 2,180 crore from Rs 1,724 crore, while Net Interest Margin stood at 3.37 per cent, up from 3.28 per cent in Q1 of FY12. The bank's provision coverage ratio stood at 79 per cent, while the tier-1 Capital Adequacy Ratio (CAR) stood at 9.49 per cent.

On the much-delayed Enam Securities deal, Sengupta said the bank has received the shareholders' approval and process of integration is on. Sengupta ruled out any immediate fund raising saying the bank is adequately capitalised with 9.49 per cent tier-1 capital.