Packing batteries with more punch
Indian researchers are working on cells that can store more energy, last longer
When Axis Bank, along with other private banks, reported sharp divergences from the asset classification and provisioning of the RBI norms last year, the bad loan issue appeared to be bottoming out.
But after reporting bad loan divergences to the tune of ₹9,478 crore pertaining to FY16, Axis Bank has reported another ₹4,867 crore of divergences pertaining to FY17 in the latest September quarter.
This has led to a sharp rise in quarterly slippages, taking the gross non-performing assets as a per cent of loans to nearly 6 per cent as of September 2017. Given that the risk-based supervision or RBS (another acronym to watch keenly after AQR) is an annual exercise conducted by the RBI, further slippages on this count are unlikely this fiscal.
But continual sharp divergences in asset classification from the RBI norms, year after year, highlight gaps in the earlier clean-up exercise, not lending much comfort to investors.
Also, continued stress from outside the bank’s watch list, a substantial rise in write-offs and significant fall in net interest margin remain a cause for concern.
The RBS exerciseSlippages into NPAs that peaked in the September quarter last year, had since moderated. From ₹8,772 crore in September quarter last year, gross slippages had tapered to ₹3,519 crore in June 2017.
But with the bad loan divergence reported for FY17, the slippages are back to ₹8,936 crore in the latest September 2017 quarter.
Axis Bank, like other lenders such as ICICI Bank and SBI, that have a higher exposure to stressed sectors, had created a watch-list (key source of future stress in the corporate loan book) in the beginning of FY17.
With over 70 per cent of accounts under the watchlist slipping into NPAs, the outstanding accounts under the watchlist have fallen from around ₹22,600 crore as of March 2016 to ₹6,052 crore as of September 2017. While this was on expected lines, the incremental stress quarter-on-quarter from outside the watchlist remains worrisome.
In the September 2017 quarter, only 30 per cent of the ₹8,110-odd crore of corporate slippages came from the watchlist. As the watchlist shrinks, more of the bank’s slippages will come from outside this list.
But the pace of slippages is worrisome.
Remember, quarterly slippages averaged ₹1,500-2,500 crore until September quarter last year. Since then, aside from the sharp spikes in a quarter or two, slippages have been in the ₹3,500-4,500 crore range.
Muted core performanceAxis Bank’s core performance has also been subdued over the past year. The bank saw a muted 1 per cent y-o-y growth in core net interest income.
This is mainly on account of reversal of interest income owing to a rise in bad loans. In September last year, loan-loss provisions had grown five-fold.
On such a high base, relatively lower provisions in the latest September quarter have led to 36 per cent y-o-y growth in net profit.
Indian researchers are working on cells that can store more energy, last longer
To fix a broken bone, doctors often harvest another bone from the patient’s body or from someone else. It ...
Superconductors from IIScScientists at IISc Bangalore have invented a device with a nanocrystal structure ...
Engineering and construction giant L&T has won a licence from the Council of Scientific & Industrial ...
Will a stock continue its current trend or will it reverse? We tell you how you can read chart patterns to ...
Sensex and Nifty 50 saw selling interest on Friday and slumped; selling pressure could continue
Investors with a long-term horizon can consider this offer
Most AMCs have been sending out cryptic e-mails. We tell you how to read between the lines
In these isolated times when people yearn for a slice of the familiar, amateur and professional chefs are ...
Forget the tuna. The island nation will keep you full and happy with coconut, koftas and jasmine
This year, on Facebook, I saw that someone had posted a list of EASY RESOLUTIONS. I didn’t copy them down but ...
With strokes of quirky humour, Partha Pratim Deb uses pulp, terracotta, glass and discarded cloth to create ...
Digital is becoming dominant media, but are companies and their ad agencies transforming fast enough to make a ...
Slow Network, promoted by journalist-lyricist Neelesh Misra, pushes rural products and experiences
How marketers can use the traditional exchange of festive wishes meaningfully
For Fortune, a brand celebrating its 20th anniversary, it was a rude shock to become the butt of social media ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor