Axis Bank posts 19% decline in Q1 profit
MUMBAI: With the Covid-19 pandemic continuing to cloud loan recoveries, private lender Axis Bank is turning conservative and raising provisions, expecting a wave of defaults when the ongoing loan moratorium ends.
The bank’s earnings released on Tuesday showed excess provisions of ₹6,898 crore and a provision coverage ratio (PCR) of 75% as on June 30, as compared to 69% as on March 31. The bank made incremental provisions of ₹733 crore in Q1 FY21 towards Covid-19.
Axis Bank said it has taken a conservative approach during the quarter in three areas-changes in accounting policies; increase in provisions on standard investments, red-flagged accounts and Covid-19 provisions; and a conservative stance on interest recognition for net interest income (NII).
Amitabh Chaudhry, chief executive, Axis Bank, said, “With these changes, we believe we are now at the conservative end of accounting choices. The aggregate impact of the aforementioned changes on the financials of Q1FY21 on pre-provision profit, profit before tax and profit after tax is ₹307 crore, ₹660 crore and ₹513 crore, respectively.”
The bank on Tuesday reported a net profit of ₹1,112.17 crore for the June quarter of FY21, down 18.8% from the same period last year, due to higher provisions.
“We continue on our journey of being a more prudent and conservative franchise. In these uncertain times, our balance sheet strengthening continues,” said Chaudhry.
The bank’s profit was slightly lower than ₹1,165 crore estimated by a Bloomberg poll of 14 analysts.