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Axis Bank on Monday said its funded exposure to highly leveraged groups has been stable at around 8 per cent (of total advances of ₹3,15,367 crore) in the third quarter ended December 31, 2015.
India’s third-largest private sector bank said its funded exposure to these groups is well distributed, with the largest group exposure being around 1.5 per cent.
The bank, in a statement to the BSE, said, “The leveraged groups referred to here are the eight large corporate groups that the investment community has identified and have been referring to as ‘highly leveraged’. This is not meant to be an Axis Bank-specific classification.”
Around 70 per cent of the net increase in funded exposure to these groups since March 31, 2014, has been to entities rated ‘A’ and above as on December 31, 2015, the statement said.
Another 25 per cent is through fresh disbursements on projects sanctioned before March 31, 2014, it added. Projects under implementation are typically rated ‘BBB’.
The bank said no sector has contributed in excess of 20 per cent of the net increase during this period. The top four sectors in terms of incremental disbursements are petroleum products, cement, power generation, and other metal and metal products.
Approximately 1.5 per cent of the bank’s exposure to the identified groups is currently classified as non-performing, another 5 per cent is restructured and around 4 per cent is under the 5/25 scheme. The bank reported 21 per cent year-on-year growth in corporate advances to ₹1,48,385 crore in the third quarter ended December 31, compared with ₹1,22,944 crore in the year-ago period.
In a recent presentation to analysts, senior bank officials said given that the bank’s focus remains on highly-rated corporates, around 80 per cent of new sanctions in the corporate book are to companies rated ‘A’ and above.
At present, 62 per cent of outstanding corporate loans are to companies rated ‘A’ and above.
“In our quest to continuously improve the rating mix of our corporate book, we have been comfortable to trade off margins for asset quality,” the officials said.
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