Axis Bank Q1 Results: Net Profit Down 19% On Higher Provisions
A customer exits an Axis Bank branch in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Axis Bank Q1 Results: Net Profit Down 19% On Higher Provisions

Axis Bank Ltd.’s profit fell in the first quarter as the private lender’s provisions rose.

Net profit declined 19% year-on-year to Rs 1,112 crore in the quarter ended June, according to its exchange filing. It reported a net loss of Rs 1,388 crore in the previous quarter ended March.

Net interest income rose 20% year-on-year to Rs 6,985 crore in the first quarter.

Asset quality improved with outstanding gross non-performing assets at Rs 29,560 crore on June 30 compared with Rs 30,234 crore as on March 31. Gross NPA fell to 4.72% from 4.86% in the preceding three-month period.

The bank reported fresh slippages worth Rs 2,218 crore compared with Rs 4,798 crore a year earlier.

The private sector lender made provisions worth Rs 4,416 crore compared with Rs 3,815 crore a year ago. It set aside additional provisions worth Rs 773 crore towards Covid-19-related impact on the balance sheet.

Loans Under Moratorium

The bank reported that 9.7% of its outstanding loan book was under moratorium as of June 30. That number has fallen significantly since April, when more than a quarter of its loan book was under moratorium. The Reserve Bank of India-approved moratorium on repayments ends on Aug. 31.

We have seen a lot of customers repay their dues in the first quarter, after applying for the moratorium between March and May, Amitabh Chaudhry, managing director and chief executive of Axis Bank, said. The bank has also grown more conservative in approving moratorium for customers and is closely looking at their needs, he said.

“We have also improved our collections infrastructure considerably, with our collections team working from home. We don’t believe that these are the final numbers for moratorium,” he said. “It’s possible that some of our borrowers may come back later and seek moratorium before August ends.”

Advances & Deposits

Total advances rose 17% year-on-year to Rs 5.79 lakh crore, while total deposits stood at Rs 6.28 lakh crore, up 16% from a year earlier. The growth in advances includes the amount allocated by the bank under the targeted long-term repo operations during the April-June period.

Outstanding corporate loans rose 16% year-on-year to Rs 2.05 lakh crore. About two thirds of the incremental corporate loans extended during the first quarter were toward short-term working capital needs, about 20% toward capital expenditure and the rest were for regular refinancing requirements.

As on June 30, 82% of the bank’s book was rated A- or above. In the first quarter 69% of incremental loans sanctioned were towards borrowers rated AA or above, the bank said.

Axis Bank’s retail loan book rose 16% year-on-year to Rs 2.98 lakh crore and accounted for 53% of the bank’s total advances. On a sequential basis, however, the bank saw a slight dip in outstanding retail loans as the segment was in excess of Rs 3 lakh crore as on March 31.

Credit card spends are now at 75% of pre-Covid levels according to Pralay Mondal, the lender’s executive director.

The bank’s investment portfolio stood at Rs 33,071 crore in the first quarter compared with Rs 21,303 crore in March. This included Rs 18,100 crore mobilised through active participation in targeted long-term repo operations. Much of these investments are toward bonds issued by companies which are neither financial institutions nor public sector entities, the bank said. This rise in the investment book is focused toward companies rated AA and above.

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