Axis Bank on Tuesday reported an 83% fall in net profit to R319 crore for the September quarter. Chief financial officer Jairam Sridharan said slippages from the watch list will be more than 60% it had originally envisaged. Excerpts…
What is your guidance on the watch list?
Depending on the operating environment, one’s judgement about which accounts on the watch list are going to slip continues to move. Watch list is a list of weak accounts and there is no particular strong accounts there. Exercising the judgement here largely depends on market developments.
Where is corporate loan growth coming from?
The corporate book has been growing at around 18% for multiple quarters now. The growth in corporate lending is not coming through the underlying demand growth but mostly through refinance transactions and by their very nature, refinance transactions tend to be somewhat opportunistic. Therefore, our ability to predict a certain number every quarter is not going to be high. For us, to get stable and predictable growth in corporate lending, it is important for the underlying demand environment to improve and the underlying private sector capex to improve.
How has the treasury performed during the quarter?
If you look at the treasury income side, you will see it has shown fairly healthy growth this quarter. What is there in the segmental reporting is losses on investments or on investments which have a credit risk component attached to it. It happens when an account falls into NPA, you end up taking a hit on the investment.
Which sectors contributed to slippages in Q2?
We have seen some significant slippages from iron & steel and some from power and a fairly large exposure in textiles that have slipped in the quarter.