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Relatively lower loan-loss provisioning vis-a-vis the year-ago period helped Axis Bank report a 35 per cent increase in second quarter net profit, even as it continued to face asset quality pressures, especially on account of RBI directed asset-classification downgrade of some loan accounts.
The private sector bank reported a net profit of ₹432 crore in the reporting quarter (Q2 FY18) against ₹319 crore in the year-ago period.
In Q2 FY18, net interest income saw a muted 1 per cent growth at ₹4,540 crore. Other income edged up 2 per cent y-o-y at ₹2,586 crore.
Advances were up 16 per cent to ₹4,10,171 crore and deposits rose 9.50 per cent to ₹4,16,431 crore.
Jairam Sridharan, CFO, said the bank’s loan growth bounced back across all segments — retail (23 per cent), SME (15 per cent) and corporate (10 per cent).
Gross non-performing asset (NPA) additions in Q2 stood at ₹8,936 crore, of which corporate slippages were ₹8,110 crore. The corporate slippages predominantly came from low-rated accounts.
As at September-end 2017, GNPAs stood at ₹27,402 crore against ₹16,379 crore as on September-end 2016.
Gross NPA additions include nine accounts, with a fund-based exposure aggregating ₹4,867 crore, which had to be reclassified as NPA during the quarter (subsequent to RBI’s annual Risk Based Supervision exercise for FY17) from ‘standard’ asset classification in the previous quarter.
The bank has created total provisions aggregating ₹1,618 crore on these accounts, which among others are from steel, power, and IT/ITeS sectors, during the quarter.
IBC exposureSridharan said his bank has exposure to 20 out of the 40 accounts that banks’ have jointly proceeded against under the Insolvency and Bankruptcy Code (IBC).
The bank’s funded exposure to these 20 accounts is ₹7,041 crore. It holds total provisions of ₹3,886 crore towards them.
Total provisions (other than tax), including for loan losses, investment depreciation and other provisions, in Q2 FY18 were lower at ₹3,140 crore against ₹3,623 crore in Q2 FY17.
Net interest margin was lower at 3.45 per cent in Q2 FY18 against 3.64 per cent in Q2 FY17.
Referring to divergence-related credit cost and underlying credit trends of the rest of the book, Sridharan said the credit cost guidance for fiscal 2018 is updated to 220-260 basis points (bps) from 175-225 bps estimated earlier.
Credit cost here refers to the loss expected within one year.
Shres of Axis Bank closed at ₹513.20 apiece, down 1.44 per cent over the previous close on the BSE.
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