Axis Bank woes pile up with first quarterly loss
NEW DELHI: Axis Bank Ltd on Thursday posted a shock loss of ₹2,189 crore in the JanuaryMarch quarter, its first quarterly loss ever, as the private sector lender made heavy provisions against bad loans. The bank, though, said asset quality is expected to normalise in 2018-19.
A Bloomberg poll of 15 analysts had expected a net profit of ₹662.30 crore. Bad loans ballooned as the bank speeded up recognition of bad assets, as well as due to new central bank rules on handling stressed assets.
In a post-earnings call with reporters, Axis Bank chief financial officer Jairam Sridharan said that with this, the current cycle of asset recognition is nearing an end and bad loan formations in fiscal 2019 will be lower than the previous year. The accelerated recognition was particularly stark in the power sector.
Sridharan also said the new regulatory norms on bad loan resolution drove recognition in the restructured book.
In the March quarter, Axis Bank added ₹16,536 crore to the bad loan category, sharply higher than ₹4,428 crore added in the December quarter. Accordingly, total gross non-performing assets (NPAs) rose to ₹34,249 crore at the end of March from ₹25,000 crore three months ago.
Gross NPAs as a percentage of total advances stood at 6.77% in the March quarter compared with 5.28% in the December quarter and 5.04% in the year-ago March quarter.
According to the lender, over ₹13,900 crore of slippages came from its corporate loan book, and 90% of these accounts were lowerrated (BB & below). Accordingly, the pool of such loans fell to ₹8,994 crore. Separately, stressed accounts under its so-called watch list also fell to ₹428 crore in fourth quarter from ₹5,309 crore a quarter before. The list was at ₹22,628 crore when the bank first revealed it in April 2016. The bank said the provision coverage ratio has been retained at 65%.