1. Axis Bank says slippages and credit costs may improve next fiscal year, post weak Q3 earnings

Axis Bank says slippages and credit costs may improve next fiscal year, post weak Q3 earnings

Axis Bank Ltd expects its asset quality to improve in the financial year with slippages and credit costs improving going forward, it said on Friday in an interview to ET Now.

By: | New Delhi | Published: January 20, 2017 11:50 AM
Axis Bank, Demonetisation, Income Tax Department, IT raids, Raids at Axis Bank, Currency Crunch, Money Laundering, Fake Accounts Gross slippages in December quarter declined 48% on-quarter and most of the slippages in corporate lending were from the watch list, and the lender said it is hopeful that the trend of low slippages can continue going forward. (Source: Reuters)

Axis Bank Ltd expects its asset quality to improve in the financial year with slippages and credit costs improving going forward, it said on Friday in an interview to ET Now. India’s third-largest private sector lender yesterday announced weaker than expected fiscal third quarter financial results, with the net profit falling sharply by 73.3% on-year to Rs 579.6 crore, amid rising NPAs and falling margins. Reuters, in an analyst poll, had forecast the net profit for the quarter at Rs 779 crore.

Axis Bank expects the current financial year 2016-17, ending March 31 to be peak in terms of slippages and credit costs, which it expect to “moderate from here on”, it told ET Now.

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Gross slippages in December quarter declined 48% on-quarter and most of the slippages in corporate lending were from the watch list, and the lender said it is hopeful that the trend of low slippages can continue going forward.

It further said that the watchlist has been the primary source of stress, but not the only source.

It maintained the credit cost guidance for the full fiscal year 2016-17 at 305 basis points.

Axis Bank’s watch list loans reduced to 2.8% of customer assets in December 2016, from 3.5% in Sept 2016 and 6.2% at beginning of current financial year 2016-17, it said earlier Thursday.

However, provisions for bad loans rose sharply on-year to Rs 3,796 crore in Oct-Dec from Rs 713 crore in the same period previous year.

Axis Bank’s gross NPAs rose by more than a full percentage point to 5.22% in Oct-Dec from 4.17% in the preceding quarter, expanded higher than expected. The company’s net NPAs in the fiscal third quarter rose to 2.18% from 2.02% in the previous quarter. Its net interest margin for Q3FY17 was at 3.43%, dropping 21 basis points on-quarter.

It also said the third quarter results were impacted by two one-off items, adding that it thinks the challenging time continues. Power and iron & steel were the most troubled sectors, which posed the greatest challenge for the bank, it said.

Axis Bank shares were the biggest loser on NSE, failing to recover early morning losses, and were trading down 5.45% at Rs 457.45.

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