Q1 Results: Axis Bank’s Profit Rises 95% But Still Misses Estimates

Axis Bank Ltd.’s net profit rose nearly twofold in the June quarter on a low base and higher other income. Yet, it missed estimates.

Net profit rose 95 percent year-on-year to Rs 1,370 crore in the June quarter, Axis Bank said in an exchange filing. That’s still lower than the Rs 1,855-crore consensus estimate of analysts tracked by Bloomberg as the bank witnessed a one-time provisioning cost due to changes in internal guidelines.

Net interest income, or core income, rose 13 percent to Rs 5,844 crore—in line with the Rs 5,965-crore estimate. Net interest margin stood at 3.4 percent.

The private lender’s asset quality improved during Q1. Its gross non-performing assets ratio contracted to 5.25 percent—the lowest in seven quarters—from 5.26 percent in the three months ended March. The net NPA ratio, too, contracted to 2.04 percent from 2.06 percent.

Though bad loans remained in control, slippages jumped to Rs 4,798 crore in Q1 from Rs 3,012 crore in the preceding three-month period.

Total provisions rose to Rs 3,814 crore in Q1 from Rs 2,711.4 crore in the January-March period. The provision coverage ratio now stands at 78 percent.

During the June quarter, Axis Bank made a change in internal guidelines to increase “conservatism in its provisioning”.

“The bank has now introduced a process of making systematic provisions towards non-fund based facilities in NPA and in stressed accounts outside NPA,” it said in a statement accompanying the press release. “This change created a one-time provisioning impact of Rs 459 crore during the quarter.”

Axis Bank Q1 Results 2019-20: Other Key Highlights

• Capital adequacy ratio was 16.06 percent as of June.
• Other income rose 32 percent year-on-year to Rs 3,869 crore.
• Year-on-year domestic loan growth at 19 percent.
• Retail loan book grew 22 percent year-on-year, while domestic corporate loan book grew 16 percent.
• Retail advances are now 52 percent of total advances of the bank.
• CASA and retail term deposits together were up 24 percent year-on-year on quarterly average basis.
• Downgraded Rs 2,242 crore into BB during the quarter, “largely from groups that have shown new signs of stress in recent months”.
• Outstanding BB & Below corporate loans were stable at 1.3 percent of customer assets.

Axis Bank shares have gained 14.7 percent so far this year, nearly double the rise in the NSE Nifty Bank Index. The stock is the fourth-best performer on the index.