Axis Bank Q2 net rises 36% to ~432 crore
Axis Bank on Tuesday reported 36 per cent year-on-year growth in its second-quarter net profit, aided by low provisioning.
Asset quality numbers worsened significantly on the Reserve Bank of India’s (RBI’s) assessment of its previous financial year numbers.
According to rules, if the RBI’s assessment of bad debt numbers for a financial year differs from the bank’s assessment by more than 15 per cent, the divergence should be disclosed.
Profit for the quarter stood at ~432 crore, against ~319 crore in the year-ago quarter. Gross slippages, or good assets turning bad, in the quarter rose significantly to ~8,936 crore, of which ~8,110 crore was in the corporate sector. Total slippages in the June quarter were at ~3,519 crore.
Most of the slippages were from the “BB-and-below” pool, the bank said.
Analysts termed the result of the bank “bad” and said the bank had earlier guided that their BB-and-below pool was healthy and there was not much cause for concern. This was not a good indication for the industry as well, they said.
The bank said RBI auditors had identified nine accounts for reclassification at the end of 2016-17 and all those accounts were now non-performing assets (NPAs) and provided for in the second quarter. The nine accounts accounted for ~4,867 crore. Last year, the divergence was of ~9,478 crore. Of these nine accounts, Axis Bank is the lead banker in one company in the information technology sector, having an exposure of ~1,143 crore. NPAs in the quarter under review mainly came from the power and steel sectors.
“We continue to engage with the RBI to align our understanding on the interpretation and guidelines in the current economic environment,” said Jairam Sridharan, chief financial officer, Axis Bank, in a call with journalists. Gross NPAs and net NPAs stood at 5.9 per cent and 3.12 per cent in the September quarter against 5.03 per cent and 2.30 per cent in the June quarter, respectively. In the year-ago quarter, gross NPAs were at 4.17 per cent and net NPA were at 2.02 per cent of the loan book.
But the provision for the quarter fell to ~3,140.41 crore from ~3,622.74 crore in the year-ago quarter. The bank’s retail and SME loans grew at 23 per cent and 15 per cent, respectively.