PPrivate sector lender Axis Bank reported a 16% decline in net profit to ₹1,306 crore for the quarter ended June 30, as provisioning for non-performing assets stayed elevated though fresh slippages declined.
This is because the bank has made higher standard asset provisioning of 1% — as compared with 0.4% in the year-earlier period — for sectors like power, iron and steel, infrastructure and construction, and telecom, as advised by the banking regulator. The additional provision in these sectors was ₹184 crore, said Jairam Sridharan, chief financial officer, Axis Bank in the post earnings media interaction.
Gross slippages of the bank in the during the reporting period was ₹3,519 crore as compared with ₹3,638 crore in the same period of the previous year and ₹4,811 crore in the immediately previous quarter. Gross NPA of the bank remained stable at 5.03% sequentially while net NPA rose to 2.3% from as compared with 2.11% in the Jan-March period.
‘Expect more on NPAs’
“Gross NPAs are near peak… on the net NPA side you may see a little bit more,” Mr. Sridharan said.
The banking regulator had asked banks to make 50% provision for the accounts that are secured and 100% for unsecured accounts that are referred for bankruptcy proceedings. and Axis Bank has said it hads ₹5,000 crore exposure on these accounts while 80% of its lending is are secured. The bank has already made ₹2,500 crore provisioning for these accounts.
The bank’s net interest income (NII) grew by 2% on year to ₹4,616 crore in the quarter under reviewduring Q1FY18 while net interest margin for Q1FY18 stood at 3.63% as compared with 3.79%. in the year-earlier period
The lender has also rubbished rumours on media reports that its MD & CEOmanaging director and chief executive officer Shikha Sharma was joining the Tata Group to lead the firm’s financial services vertical. “Your assertions are untrue and unfounded,” a bank statement said. “There is a laid down process that the board undertakes at regular intervals, but to conclude that there is going to be a change of leadership is entirely premature and speculative.” it said.