Money & Banking

Axis Bank Q1 net profit down 19% on higher provisions

Our Bureau. Mumbai | Updated on July 21, 2020

Amitabh Chaudhry, MD and CEO, Axis Bank

Private sector lender Axis Bank reported an 18.8 per cent decline in net profit at ₹1,112.17 crore in the first quarter of the fiscal against ₹1,370.08 crore a year ago with the bank significantly increasing provisions.

“Adjusted for accounting policy changes and net interest income reserves created during the quarter, net interest income, operating profit and profit after tax for the quarter would have been ₹7,100 crore, ₹ 6,151 crore and ₹1,626 crore, respectively, growing by 22 per cent, 4 per cent and 19 per cent year-on-year, respectively,” it said in a statement on Tuesday, adding that the bank reviewed its accounting practices and revised them to achieve more prudent and conservative outcomes.

For the quarter ended June 30, the bank’s total income remained flat at ₹19,125.57 crore against ₹19,123.71 crore in the same period a year ago.

Net interest income grew 20 per cent year on year to ₹6,985 crore during the April to June 2020 quarter from ₹5,844 crore a year ago. Net interest margin for the first quarter was 3.4 per cent.

Non-interest income (comprising fee, trading profit, and miscellaneous income) declined by 33 per cent to ₹2,587 crore in the first quarter this fiscal.

Its provisions shot up to ₹ 4,416.42 crore for the first quarter this fiscal against ₹3,814.58 crore a year ago. The bank made incremental provisions of ₹733 crore in the first quarter this fiscal towards Covid-19.

Gross non-performing assets and net NPA declined to 4.72 per cent and 1.23 per cent as on June 30, from 5.25 per cent and 2.04 per cent a year ago.

The bank’s also reported a significant decline in the number of customers under moratorium, with 9.7 per cent of the book by value under moratorium by June 30.

Addressing reporters after the results, Amitabh Chaudhry, Managing Director and CEO, Axis Bank, stressed that the bank’s capital provision is strong. “Our capital position is strong and the bank is well capitalised with a capital adequacy ratio of 17.47 per cent and CET 1 of 13.50 per cent as on June 30. However, we continually evaluate various capital raising initiatives from time to time for our business.”

The bank has an enabling resolution from the board, pending approval from shareholders that will allow it to raise funds over the next one year, he further said.

The bank’s balance sheet grew 16 per cent year on year to ₹8,97,138 crore as on June 30. Total deposits grew by 16 per cent year-on-year on period-end basis, while total advances, including TLTRO investments, grew 17 per cent on an annual basis by the end of the first quarter.

Published on July 21, 2020

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