The third largest bank is itself in the middle of bad loan mess, leading to a slowdown in credit disbursal as capital went more into providing for stressed assets as against fresh asset creation.
Axis Bank has decided to be ‘cautious’ with lending as it sees new risks coming up in the economy, news agency PTI reported citing an unidentified official on Thursday. The third largest bank is itself in the middle of bad loan mess, leading to a slowdown in credit disbursal as capital went more into providing for stressed assets as against fresh asset creation.
“We are cautious given whatever is happening in the economy as some new signs of stress are emerging in the system,” PTI reported citing managing director and chief executive Amitabh Chaudhry as saying. Adding, he said that the bank wants to be conservative in approach and put its risk management practices on the right track. “We want to be more conservative than before and there are signs of emerging stress,” he added.
The top executive also clarified that his statement should not be construed as Axis Bank is cutting down on its core business of taking risks and lending, PTI reported. When asked about the plans of the bank to raise capital, Chaudhary said that the bank management is seeking an enabling resolution for such an issue. However, he did not specify the timelines and the route with which it would raise the funds, PTI reported.
Axis Bank was back on track in Q4FY19 with a net profit of Rs 1,505.6 crore as against a net loss of Rs 2,188.74 crore in the same period a year ago. On a sequential basis, its net profit fell by 10.4 per cent compared to a net profit of Rs 1,680.85 crore in the third quarter of 2017-18. This is largely attributable to lower other income of Rs 3,526.28 crore in the quarter ended March 31, 2018, against Rs 4,000.69 crore in the previous quarter.