The bank also holds additional provisions of Rs 2,600 crore towards various risk contingencies, over and above the regular NPA provisioning and the 0.4% standard assets provisioning requirement.
Private-sector lender Axis Bank on Tuesday reported a net loss of Rs 112 crore in the September quarter of FY20, against a profit of Rs 790 a year ago, owing to a 20% rise in provisions on a y-o-y basis to Rs 3,518 crore in the quarter and a 575% surge in tax expense to Rs 2,545 crore.
A change in the tax rate to 25% from 35% resulted in a reversal in the bank’s deferred tax assets. “The re-measurement has resulted in a writedown of the net deferred tax assets pertaining to earlier years by Rs 2,137.59 crore which has been fully charged to the profit and loss account,” Axis Bank said in its notes to accounts.
Net interest income — the difference between interest earned and interest expended — rose 16.6% y-o-y to `6,102 crore and net interest margin (NIM), a key measure of profitability, rose 11 basis points (bps) sequentially to 3.51%. Its operating profit rose 45% y-o-y to `5,952 crore in the September quarter.
Slippages increased 4% sequentially to Rs 4,983 crore in Q2. Corporate slippages stood at Rs 2,862 crore, 97% of which originated from its disclosed book of BB and lower-rated corporates.
The bank saw an improvement on the asset quality front in Q2, with the gross non-performing asset (NPA) ratio falling 22 bps sequentially to 5.03%. In absolute terms, the gross NPA stood at Rs 29,071 crore. Its recoveries and upgrades stood at Rs 2,213 crore, while write-offs during the quarter were at Rs 3,104 crore.
As on September 30, Axis Bank’s provision coverage ratio (PCR) improved to 79% from 78% in Q1FY20. The bank also holds additional provisions of Rs 2,600 crore towards various risk contingencies, over and above the regular NPA provisioning and the 0.4% standard assets provisioning requirement. “These Rs 2, 600 crore of provisions are not counted towards PCR calculations of the bank,” the lender said in a release.
The bank’s balance sheet grew 11% y-o-y and stood at Rs 8.09 lakh crore as on September 30, 2019. Its advances grew 14% y-o-y to Rs 5.21 lakh crore. Retail loans grew 23% y-o-y to Rs 2.73 lakh crore. Corporate credit grew 7% y-o-y and stood at Rs 1.87 lakh crore. Total deposits grew 22% y-o-y to Rs 5.83 lakh crore. The CASA ratio stood at 41%, down from 48% a year ago. Capital adequacy ratio (CAR) under Basel III rose 206 bps y-o-y to 18.23% in Q2FY20.