Axis Bank sees ₹1,388 cr. loss on higher provisions;CEO sights ‘pain’ ahead

Virus to impact fee income, provisions

Private sector Axis Bank has reported a ₹1,388 crore loss in the Jan-March quarter due to higher provisions as compared to the ₹1,505 crore profit a year earlier.

For the quarter, the bank has made provisions of ₹7,730 crore, including the ₹3,000 crore related to COVID-19 pandemic. This has taken the overall additional provisions held by the bank to ₹5,983 crore. Provisions during the same period of the previous year was ₹2,711 crore.

“The overall additional provisions held by the bank towards various contingencies, together with the standard asset provisions, translate to a standard asset coverage of 1.3% as at March 31, 2020,” the bank said.

As on March 31, the bank’s provision coverage, as a proportion of gross NPAs stood at 69%. Specific bad loan provisions for Q4 FY20 were ₹4,204 crore, compared to ₹1,714 crore in Q4 last year, and ₹2,962 crore in Q3 FY20.

The bank recognised slippages of ₹3,920 crore during Q4 FY20, compared to ₹6,214 crore in Q3 FY20 and ₹3,012 crore in Q4 FY19.

Slippages from the loan book were at ₹3,418 crore and those from investment exposures stood at ₹502 crore. Corporate slippages were at ₹1,839 crore.

As on March 31, 2020, the bank’s gross NPA and net NPA levels were 4.86% and 1.56% respectively, as against 5% and 2.09% respectively as on December 31, 2019. Amitabh Chaudhry, MD & CEO, Axis Bank, said the business and operating performance of the bank suggested Q4 was not materially impacted by the COVID-19 induced lockdown, though some impact was felt on the fee income. He, however, indicated some pain would be inevitable going ahead.

“Given the size and the reach of the bank, our cross border ties in sectors and geographies, it will reflect in numbers too. Among other things, we expect our fee income growth to slow down, and provisions to increase materially. The COVID-19 induced slowdown will delay the normalisation of our corporate stress book and we expect there will be further downgrade in the BB pool in FY21,” Mr. Chaudhry said. He said the lockdown and its impact on the economic slowdown will be widespread and will take time to normalise.

The net interest income — interest earned less interest expended — grew 19% year-on-year to ₹6,808 crore in Q4. Net interest margin for Q4 FY20 was 3.55%. Non-interest income, comprising fee income, trading profit and miscellaneous income, grew 13% to ₹3,985 crore in Q4. Fee income grew 6% on quarter to ₹2,931 crore. Loans grew 15% year-on-year to ₹5,71,424 crore, while retail loans rose 24% to ₹3,05,400 crore, accounting for 53% of net advances. Overall deposit growth was 17% year-on-year.

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Printable version | Jun 4, 2020 4:18:56 PM |

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