Axis Bank on Tuesday reported a net profit of R319 crore for the September quarter, down 83% from the same period last year. The massive fall in profit was owing to a 71% jump in total provisions to Rs 3,623 crore.
Axis Bank set aside Rs 3,648 crore for bad loans in the quarter.The net interest income rose 11% year-on-year to Rs 4,514 crore and the net interest margin (NIM), a key measure of profitability, stood at 3.93%. The operating profit rose 13% y-o-y to Rs 4,100 crore in the quarter under review.
The bank suffered on the asset quality front with gross NPA rising 163 basis points (bps) sequentially to 4.17%.
The bank’s watch list got reduced 32% over the previous quarter and stood at Rs 13,789 crore, leading to a rise in bad loans. The reduction in the watch list represents slippages to NPAs amounting to Rs 7,288 crore, which comprise 89% of the total corporate credit slippages.
“We now believe that slippages from the watch list (Rs 22,600 crore) will be more than the 60% we had originally envisaged. A materially higher portion of the watch list could turn NPAs by the end of FY18,” said Jairam Sridharan, chief financial officer.
He added that the bank is watching the operating environment closely and is looking for some of the resolution mechanism in the market to kick in.
During the quarter, the bank added Rs 8,772 crore to gross NPAs, and recoveries and upgrades were at Rs 1,073 crore and write-offs stood at Rs 873 crore.
During the quarter, the bank sold assets with net book value of Rs 1,128 crore to asset reconstruction companies against net sale consideration of Rs 822 crore comprising Rs 159 crore in cash and Rs 663 crore in security receipts.
The bank’s balance sheet grew 17% y-o-y and stood at Rs 5.57 lakh crore in the September quarter and its advances grew 18% y-o-y to Rs 3.53 lakh crore.
Retail loans grew 25% y-o-y and stood at Rs 1.49 lakh crore and accounted for 42% of net advances of the bank. Corporate credit grew 14% y-o-y and stood at Rs 1.58 lakh crore.