Private lender Axis Bank’s stock rose 8.97% to ₹538.90 on the BSE on Friday. This came a day after the lender had posted its first-ever quarterly loss since it listed, with analysts taking a positive view of the threefold increase in provisioning to ₹7,180 crore, indicating that a major part of stress recognition had been completed
Loan growth
“Dismal asset quality (multifold rise in slippages) took the sheen off of an otherwise operationally-steady Q4FY18 (18% loan growth and sustained momentum in retail franchise), thereby resulting in a loss,” broking firm Edelweiss said in a note to clients. “The bank maintained provisioning coverage leading to significantly higher credit cost. Major part of stress recognition seems to be over but recovery is expected to take a while,” it said.
The bank reported fresh slippages of ₹16,536 crore during the fourth quarter resulting in the almost threefold increase in provisions to ₹7,180 crore.
Gross NPAs as on March 31 stood at 6.77% of the gross advances compared with 5.04% a year earlier. “Even though retail continues to strengthen, earnings visibility remains weak. FY18 performance has rattled investors’ confidence. This, along with uncertainty at top management level, will cap valuations in the near to medium term,” the brokerage said. With MD and CEO Shikha Sharma deciding to step down after December, the bank has started the process of finding a replacement.
