Axis bank's net profit grew by 32 percent in the July-September quarter to Rs 531.64 crore, over the corresponding quarter the previous year.

The growth was mainly due to increase in other income and decline in cost of funds. Mr. Somnath Sengupta, the banks executive director and CFO said that increase in CASA (Current account Saving Account) deposits aided the bank to cut down its costs of funds by 5.41 percent.

He said that fee and trading income within the income category witnessed a good growth and the bank had a miscellaneous income of Rs. 123 crore recovered from written off loans.

Trading profit of the bank in the second quarter was lower (224 crore) from the first quarter, when it was Rs. 326 crore. The reason for this was hardening of bond yields.

Notwithstanding the economic slowdown, Axis Bank maintained an exceptionally high loan growth rate. The bank's loan book grew 54% in the December 2008 quarter at a time when overall loan growth rose by 24%. But the loan growth had slowed down in the second quarter. The bank's loan demand grew only 17.7% in the quarter ended September 30th compared with the 13% growth in overall credit demand.

Mr. Sengupta said that the bank plans to add 200 branches this fiscal of which 55 branches have already been opened in the second quarter. The bank plans to add another 200 branches next financial year as well.

Talking about the growth in business, Mr. Sengupta said "Loan growth is unlikely to cross 20 per cent this year going by the current credit offtake. Next year we should see higher growth at around 25 per cent. Deposit growth is also likely to be along the same lines at 25 per cent."

Axis bank's net interest margin (NIM) increased by 18 basis points quarter-on-quarter ( Q-o-Q) at 3.52% for September 2009 quarter. The bank's management has indicated that it expects NIM to remain in the range of 3.25-3 .5 percent in the coming quarters.

The bank has slashed interest rates on car loans by around 150-200 basis points (1.5-2 percentage points) in the last one month in some southern markets.