Axis Bank net profit grows by 4.6%, provisioning pressure persists

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Published: January 23, 2020 9:41:17 AM

Gross NPA stood at 5% compared to 5.03% a quarter ago.

axis bank, axis bank net profutThe bank’s net interest income (NII) grew 15% Y-o-Y to Rs 6,453 crore during quarter, from Rs 5,604 crore last year.

Private sector lender Axis Bank on Wednesday reported a 4.6% year-on-year increase in its net profit to Rs 1,757 crore for the December quarter. However, these numbers were below consensus estimates. According to Bloomberg’s estimates, the bank was expected to register a net profit of Rs 2,073 crore.

Operating expenses increased 11% Y-o-Y to Rs 3,131 crore, which also dented the bottom line. The bank’s net interest income (NII) grew 15% Y-o-Y to Rs 6,453 crore during quarter, from Rs 5,604 crore last year. The operating profit for the quarter was Rs 5,743 crore, up 4% Y-o-Y from Rs 5,525 crore.

The pressure on the balance sheet came from fresh slippages and provisions. The bank recognised slippages of Rs 6,214 crore during the third quarter, compared with Rs 4,983 crore in the September quarter and `3,746 crore in the year-ago period. Slippages from the loan book were at Rs 5,124 crore and those from investment exposures stood at Rs 1,090 crore. Corporate slippages stood at Rs 3,891 crore. The bank said 81% of corporate slippages came from previously disclosed ‘BB’ and below-rated clients.

Amitabh Chaudhry, MD & CEO, said: “As we have anticipated and mentioned previously, after elevated levels of slippages in the last three quarters, the stock of our BB-rated portfolio has declined substantially and it is in line with normalised level. We remain conservative on asset classification and provisioning.” The bank now holds Rs 2,558-crore additional provisioning for various contingencies which is not considered in the provisioning coverage ratio (PCR). The PCR for the quarter stood at 78%.

The specific loan loss provisions for Q3FY20 stood at Rs 2,962 crore, compared with Rs 3,352 crore in Q3 last year and Rs 2,701 crore in Q2FY20. Total provisions, including standard assets and other provisions, increased 13.63% to Rs 3,470.92 crore, against Rs 3,054.51 crore in the year-ago quarter. In the July-September quarter, the bank had set aside Rs 3,518.39 crore in provisions. Post-provision, the net NPA ratio was at 2.09%, against 1.99% in the July-September quarter and 2.36% in the year-ago quarter.

Gross NPA stood at 5% compared to 5.03% a quarter ago. In absolute terms, gross NPAs stood at Rs 30,073 crore and net NPA at Rs 12,160 crore. The bank expects net NPA to come down to
the level of 1% in coming quarter, Chaudhry said.

The net interest margin was at 3.57%, compared with 3.51% a quarter ago. The domestic loan growth remained at 18% Y-o-Y, while total deposits grew 21% Y-o-Y. The bank said it witnessed one large recovery in a steel sector account. The miscellaneous income for the quarter stood at `497 crore, compared with `1,007 crore in Q3FY19.

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