Axis Bank Q3 profit rises 5%, growth muted over bad loans

Slippages at ₹5,124 crore; NIM at ten-quarter high

Private sector lender Axis bank reported a net profit of ₹1,757 crore for the third quarter of the financial year, reflecting a 5% growth over the same period of the previous fiscal.

Net profit growth was muted due to elevated level of slippages to bad loans. The bank’s operating profit for the quarter was ₹5,743 crore, up 4% year-on-year.

“[Third quarter] of FY19 had witnessed one large recovery in an account in the steel sector,” the bank said.

Net interest income (NII) grew 15% year-on-year to ₹6,453 crore, while net interest margin for the third quarter stood at a 10-quarter high of 3.57%.

“The environment remained challenging, with banking sector loans and deposit growth [at] 8% and 10% respectively. In this context, our domestic business growth has been healthy,” Amitabh Chaudhry, managing director and chief executive officer, Axis Bank, said in the post earnings media conference.

Non-interest income for the period was ₹3,787 crore compared to ₹4,000 crore a year earlier.

Slippages to non-performing assets remained elevated at ₹6,214 crore for the third quarter, compared with ₹4,983 crore in the second quarter and ₹3,746 crore a year earlier.

Slippages from the loan book stood at ₹5,124 crore. In addition, slippages from the investment book were at ₹1,090 crore, largely from one housing finance company account, the bank said. “On the asset quality front, slippages remained elevated as we anticipated and mentioned previously. The stock of our BB rated book has declined significantly and in line with normalised levels,” Mr. Chaudhry said.

Bad loan provisions for the quarter were ₹2,962 crore, compared with ₹3,352 crore in Q3 last year and ₹2,701 crore in Q2.

“The bank now holds ₹2,558 crore of additional provisions for various contingencies which are not considered in provision coverage ratio,” Mr. Chaudhry said. The bank’s PCR as on end December was 78%.

As on December 31, 2019, the bank’s gross NPA was 5% as compared to 5.03% in the previous quarter and 5.75% a year ago. Net NPA ratio was 2.09% as compared to 1.99% in the previous quarter and 2.36% year ago.

Domestic loans grew 18% while retail loans grew 25% on year to Rs 2,91,554 crore and accounted for 53% of the net advances of the Bank.

The share of unsecured loans like personal loans and credit cards has been stable on year on year basis at 17% of retail book.

The corporate loan book grew by 9%, with domestic corporate loan book up 16%.

The total deposits grew 15% year-on-year. The share of current and savings account deposit and retail term deposits in the total deposits stood at 82% as on December end.

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Printable version | Feb 28, 2020 2:50:00 PM |

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