Axis Bank hikes stake in Max Life Insurance to 5.99 per cent

India’s third largest private sector bank Axis Bank has informed stock exchanges on Monday that the bank has purchased 4.99 per cent equity stake, in Max Life Insurance Company Limited (MLIC) from Max Financial Services Limited (MFSL) and Mitsui Sumitomo Insurance Company Limited (MSI) for a total cash consideration of Rs. 95.75 crores. With this Axis Bank’s equity stake in MLIC has increased to 5.99 per cent.

MLIC, a joint-venture between MFSL and MSI, was incorporated on July 11, 2000 and is primarily engaged in the business of life insurance in India. MFSL sold 3.99 per cent stake for Rs 76.56 crore to the bank. The deal places the value of the insurance company at around Rs 1,918 crore approximately. While MSI sold one per cent stake in MLIC at Rs 19.19 crore.

As of March 31, 2015, MLIC is one of the leading life insurers in India with a paid-up capital of Rs. 1,919 crores. The gross premium collected by the MLIC was Rs. 8,172 crores in financial year ended March 31, 2015; Rs. 7,279 crores in financial year ended March 31, 2014; and Rs. 6,639 crores in financial year ended March 31, 2013. 

On financial front, In Q3FY16 Axis Bank’s NII (Net Interest Income) grew by a strong 16 per cent to Rs 4162.06 crore during the quarter as compared to Rs 3589.56 crore in the previous year due to robust pick up in loan advancement. Net interest margin declined to 3.85 per cent from 3.93 per cent in the corresponding quarter a year ago. This was primarily due to decrease in the base rate which has fallen 65 basis points in the past year, leading to margin compression. Banks profit after tax increased by 15 per cent to Rs 2175.3 for the quarter in review from Rs 1899.76 crore achieved in the same period of previous fiscal. 

Sequentially, provisioning for bad loans increased by 0.8 per cent to Rs 712.59 crore from Rs 707.17 crore in the last quarter. Bank's asset quality worsens further as its gross Non- Performing Assets (NPAs), as a percentage of gross advances rose 30 basis points sequentially to 1.68 per cent and net NPA’s were augmented by 27 basis points to 0.75 per cent.