AXIS BANK Q2 PROFIT MISSES ESTIMATE; BAD LOANS RISE

MUMBAI: Axis Bank Ltd on Tuesday missed the second quarter net profit estimate and increased its credit cost guidance, in an indication that the bad loan stress is likely to continue for a few more quarters. Credit costs refer to the percentage of provisioning or cover for bad loans against total advances.

The bank reported a profit of ₹432.38 crore against ₹319.08 crore a year ago and ₹1,305.60 crore a quarter ago. The bank had been expected to post a profit of ₹1,318.30 crore, based on a poll of 20 analysts by Bloomberg.

Gross bad loans rose to ₹27,402.32 crore as on September 30 from ₹16,378.65 crore a year ago and ₹22,030.87 crore in June quarter. The rise in bad loans was due to an annual exercise conducted by the RBI, that pointed out divergence in asset classification for fiscal 2017.

For Axis Bank, divergence in gross bad loans, the difference between RBI’S assessment and that reported by the lender, stood at ₹5,630 crore at end March 2017, while divergence in provisions was at ₹1,318 crore.

Jairam Sridharan, chief financial officer, said that the regulatory exercise was concluded this month and subsequently the bank reclassified nine accounts with outstanding balance of ₹4,867 crore as nonperforming in the second quarter. For these nine accounts, Axis Bank has kept aside ₹1,618 crore as provisions. Separately, it also made an incremental provision of ₹500 crore against accounts referred under the Insolvency & Bankruptcy Code.

As the end of September, gross and net NPA ratio stood at 5.90% and 3.12% respectively.