Axis Bank net dips 46% to Rs 701 cr as provisions soar

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Mumbai | Published: July 31, 2018 2:21 AM

Private-sector lender Axis Bank on Monday reported a net profit of Rs 701 crore in the June quarter of FY19, 46% lower than in the year-ago period, owing to a 42% rise in provisions on a year-on-year (y-o-y) basis to Rs 3,338 crore in the quarter.

Axis Bank net dips 46% to Rs 701 cr as provisions soar

Private-sector lender Axis Bank on Monday reported a net profit of Rs 701 crore in the June quarter of FY19, 46% lower than in the year-ago period, owing to a 42% rise in provisions on a year-on-year (y-o-y) basis to Rs 3,338 crore in the quarter. It had reported a net loss of Rs 2,189 crore in the Q4 of FY18.

The bank’s net interest income — the difference between interest earned and interest expended — rose 12% y-o-y to Rs 5,167 crore and its domestic net interest margin (NIM), a key measure of profitability, rose eight basis points (bps) sequentially to 3.67%. Its operating profit rose 23% y-o-y to `4.269 crore in the June quarter.

Slippages declined 74% sequentially to Rs 4,337 crore in Q1, 88% of which originated from its disclosed book of BB and lower-rated corporates.

Jairam Sridharan, CFO, told reporters that much of the recognition process had been completed. “As you saw, the pool from which our slippages are coming is the BB and below and that pool has continued to shrink over the last nine quarters – from a peak of 7.5% or so it is now at 2%,” he said, adding, “we continue to think we are at the very last phases of asset quality recognition cycle in corporate and you’ll probably see another quarter of slightly elevated levels and then you should see going back to normalised levels.” The bank saw an improvement on the asset quality front in Q1, with the gross non-performing asset (NPA) ratio falling 25 bps sequentially to 6.52%. In absolute terms, the gross NPA stood at Rs 32,662 crore at the end of June 2018. Its recoveries and upgrades stood at Rs 2,917 crore, while write-offs during the quarter were at Rs 3,007 crore.

Sridharan credited the insolvency resolution process for some of the recoveries. “The NCLT (National Company Law Tribunal) process is going largely as per our expectations as we are quite satisfied with what is happening there,” he said.

The bank’s total exposure to the two NCLT lists is about `4,600 crore, following the resolution of one big account from the first list. “On that (the current exposure), we have provisions of 83% and unless haircuts are larger than that, it is unlikely that it is going to have any material negative impact on us,” Sridharan added. A large recovery was also made outside the NCLT process.

The bank’s balance sheet grew 14% y-o-y and stood at `6.93 lakh crore as on June 30, 2018. Its advances grew 14% y-o-y to `4.41 lakh crore. Retail loans grew 21% y-o-y to `2.12 lakh crore. Corporate credit grew 6% y-o-y and stood at `1.72 lakh crore and accounted for 39% of net advances, led by a 32% growth in working-capital loans.

The bank’s capital adequacy ratio (CAR) under Basel-III rose 21 bps y-o-y to 16.57% in Q1FY19. Axis Bank’s shares on the BSE rose 2.67% on Monday to close at `568.45.

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