Decline in y-o-y profit to Rs 1,306 crore was, however, lower than analysts’ estimates
Axis Bank on Tuesday reported a 16% decline in year-on-year net profit to Rs 1,305.60 crore, hurt by higher provisions for bad loans and lower interest income, but said it was hopeful of a turnaround in the next quarter. However, the drop in net profit was lower than what analysts were expecting. According to Bloomberg estimates, the street had forecast a net profit of Rs 1,272 crore. “Q1 was a quarter during which the turnaround in our financial performance further gained momentum,” said Jairam Sridharan, chief financial officer, Axis Bank. “If you look at the bank’s profit-after-tax growth, you will find that it has fallen by 80%, 40% and now you are seeing 16%. It is an indication of where we are headed. I feel good about the turnaround gathering a lot of strength and about our ability to break out in the coming quarter,” he added.
During the quarter, provisions for bad loans increased to Rs 2,341.93 crore, up 10.6% from the year-ago period. However, on a sequential basis, it fell 9.3%. The gross non-performing assets was 5.03%, up from 2.54% in the corresponding period last year and down 1 basis point from the march quarter. Net non-performing assets increased to 2.30% from 1.08% a year ago and 2.11% in the previous quarter. Net interest margin (NIM) fell to 3.63% from 3.79% in the year-ago period and 3.83% in the previous quarter. “There is a migration that continues to happen from base rate to MCLR, and as that continues to happen, you will see repricing of loans to existing customers at lower rate.
Plus if you take some specific accounts that have slipped into NPA or could slip into NPA, those will affect your NIMs as well,” Jairam Sridharan said in a media call. The bank’s net interest income, which is the difference between interest earned and interest expended, stood at Rs 4,616.14 crore, up 2.2% year-on-year, but down 2.4% from the previous quarter. During the quarter, interest earned fell to Rs 11,052.49 crore, down from Rs 11,113.90 crore in the year-ago period and Rs 11,168.15 crore in the March quarter. Axis Bank said the growth in corporate advances had started to recover in the first quarter, driven by a pick-up in working capital loans, while growth in retail loans continued as before. Net Advances grew 12% year-on-year.
Retail advances grew 22% year-on-year and corporate working capital loans grew 23%. Retail advances accounted for 46% of net advances. The bank’s capital adequacy ratio and Tier I capital adequacy ratio stood at 16.63% and 12.60%, respectively. Shares of Axis Bank closed at `547.40, up 2.36% on Tuesday.