Axis Bank’s Profit Falls For Sixth Straight Quarter
Axis bank’s net profit fell 16 percent while asset quality remained unchanged on a sequential basis.
Axis Bank Ltd.’s profit declined for the sixth straight quarter even as the private lender’s asset quality remained stable.
Net profit in the three months ended June fell 16 percent to Rs 1,306 crore over the year-ago period, according to the Mumbai-based lender’s exchange filing. The consensus estimate of analysts tracked by Bloomberg stood at Rs 1,266 crore. Net interest income or the core income that the bank earns from operations grew 2.2 percent to Rs 4,616 crore, falling short of the consensus estimate of Rs 4,780 crore.
The bad loans ratio to total assets remained unchanged but their absolute value grew sequentially. The value of gross non-performing assets rose 3.5 percent to Rs 22,031 crore – that’s 5.03 percent of the total assets. Net non-performing assets increased 19 basis points to 2.3 percent.
The gross non-performing asset level is near a peak, said Chief Financial Officer Jairam Sridharan during an earnings conference call. The net NPA number may still increase, he said.
Axis Bank also recognised power, iron and steel, construction and telecom as the four stressed sectors. It said that their total outstanding loan exposure to these sectors is Rs 30,000 crore.
The bank has made an additional standard asset provisioning of Rs 184 crore for the four identified sectors. Total provisioning, however, fell 9.3 percent sequentially to Rs 2,341 crore.
The private lender's watch list, which includes closely monitored stressed accounts, declined 16 percent during the quarter to Rs 7,941 crore. The decline was largely due to loans turning sour and fewer recoveries due. Loans worth Rs 797 crore slipped from the watch list to turn non-performing assets, while advances worth Rs 713 crore were repaid in the quarter.
Sridharan said that 60 percent of Axis Bank's watch list has now slipped to the non-performing category. The lender has seen a total reduction of 65 percent in its watch list since it was announced first in 2015. Slippages from the category may increase but wouldn’t be “too dramatic”, Sridharan said.
The management said that it expects loan recoveries to improve in the second half of the financial year.
Other Highlights
- Provision coverage ratio at 65 percent.
- Net interest margin narrowed 20 basis points to 3.63 percent.
- Current and savings account deposits grew 25 percent year-on-year.
- CASA ratio at 49 percent.
- Operating profit margin stood at 2.87 percent.
- Corporate banking fees declined 14 percent over last year.
- Corporate loan growth recovering on the back of working capital loans: Management.
Shares of Axis Bank closed almost 2 percent higher, ahead of the results, while the benchmark BSE Sensex ended trade 0.05 percent lower.
