Axis Bank Net Falls 1%, Misses St View

Earn­ings from re­tail lend­ing dou­ble; trea­sury, cor­po­rate num­bers dis­ap­point KEEP­ING A WATCH

The Economic Times - - Companies: Pursuit Of Profit -

Mum­bai: Axis Bank, In­dia’s third-largest pri­vate sec­tor lender by as­sets, said net profit for the March quar­ter shrank 1% from a year ear­lier, fall­ing short of ex­pec­ta­tions as pro­vi­sions for bad loans ate into prof­its, amid a fu­ture that looks as bleak as the past quar­ter.

The bank said net profit fell to ₹ 2,154 crore from ₹ 2,181 crore a year ago, boosted by more than dou­bling of earn­ings from re­tail lend­ing even as its trea­sury and cor po­rate divi­sion fal­tered. Bloomberg poll of an­a­lyst es­ti­mates showed prof­its could be ₹ 2,330 crore. “The op­er­at­ing en­vi­ron­ment dur­ing Q4 was tough and the in­vest­ment cli­mate hasn’t changed markedly,” Jairam Srid­ha­ran, CFO, Axis Bank, said. “From a sec­tor stand­point, Q4 growth met­rics both on credit and de­posit side re­mained some­what muted. The stress out­look re­mains el­e­vated and the op­er­at­ing en­vi­ron­ment con­tin­ues to re­main chal­leng­ing.”

The bank’s net in­ter­est in­come, or the dif­fer­ence be­tween in­ter­est earned on loans and that paid for funds, rose 19.8% to ₹ 4552.6 crore at the end of March 2016. It will pay a div­i­dend of ₹ 5 a share. The bank saw a good growth in its re­tail divi­sion with home and auto loans, where earn­ings out­paced cor­po­rate lend­ing. Its pre­tax profit from re­tail more than dou­bled to ₹ 747 crore, from ₹ 334 crores a year ear­lier.

The bank’s as­set qual­ity de­te­ri­o­rated partly due to the RBI dik­tat on pro­vi­sion­ing as its gross bad loans climbed to 1.67% of to­tal as­sets, from 1.34% a year ear­lier. Net bad loans, af­ter pro­vid­ing for losses, rose to 0.7% from 0.44% But ad­di­tion of fresh bad loans slowed to ₹ 1,474 crore in the March quar­ter from ₹ 2,082 crore in the De­cem­ber 2015.

“Our out­look with re­spect to as­set qual­ity con­tin­ues to re­main cau­tious, some of the as­set qual­ity in­creases we have seen this year will con­tinue to sus­tain,” Srid­ha­ran said.

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