Axis Bank Q1 profit down 19% on higher provisions, other income also dips

Gross non-performing assets (GNPA) stood at 4.72 per cent, compared with 5.25 per cent in the year ago quarter and 4.86 per cent in the fourth quarter

Private sector lender Axis Bank Ltd on Tuesday reported a 31.29 per cent year-on-year drop in profit before tax for the first quarter ended June 30 on higher provisions booked in the current quarter, and also due to moving towards a more conservative mode of accounting. 

Profit before tax stood at Rs 1,427.98 crore, against Rs 2,078.18 crore in the year ago quarter. In the fourth quarter, the bank had reported a loss of Rs 1,878.91 crore before tax. Net profit after tax for the first quarter of fiscal 2020-21 fell 19% to Rs 1,112.17 crore. The bank said it would have booked profit after tax of Rs 1,626 crore for the quarter under review if accounting practices were not changed. 

Other income, which includes fees and commissions earned from selling third party products, fell to Rs 2,586.68 crore, from Rs 3,868.76 crore in the year ago quarter. 

The bank’s net interest income (NII) grew 20 per cent year-on-year to Rs 6,985 crore from Rs 5,844 crore in the year ago quarter. Net interest margin at the end of the quarter under review stood at 3.40 per cent.  

The bank's gross non-performing assets (GNPA) were at 4.72 per cent, compared to 5.25 per cent in the year ago quarter and 4.86 per cent in the fourth quarter.  

Provisions rose to Rs 4,416.42 crore in the quarter under review, vis-a-vis Rs 3,814.58 crore in the year ago quarter and Rs 7,730.02 crore in the fourth quarter. The bank said it also holds additional provisions, including for Covid-19 related stress of Rs 6,898 crore, of which Rs 915 crore were provided in the quarter under review.  

The bank holds Covid-19 related provisions of Rs 3,733 crore, as against the RBI requirement of Rs 659 crore, the bank’s management said in a call with the media.  

Just about 9.7 per cent of the bank’s advance's books are under moratorium, the bank management said. In the first phase of moratorium, the share was 25-28 per cent of the advance's books. The management said in the first phase of the moratorium, customers were uncertain about their liquidity prospects and therefore availed moratorium in larger numbers, however, in the second phase, customers wanted to pay back and the bank also advised the customers on the need, or lack of it, in availing the moratorium and the financial implication in both the cases. The management also said that credit card spent returned to 75 per cent of the pre-covid levels and should normalise by the third quarter. 
 

The bank’s credit growth is also picking up pace and in the first quarter, it lent to more than 600 customers, out of which 51 were new customers. Just about 2 per cent of the disbursement was towards project loans, the rest were working capital or retail loans. The bank, however, has tightened its credit matrix and is cautious in giving loans, the management said.  

“We remain cautious and conservative. We believe the crisis is yet to play out and at the same time we need to capitalise whatever opportunity comes,” said Amitabh Chaudhry, MD & CEO of  Axis Bank. 

The bank’s deposits grew at 16 per cent YoY and advances grew at 17 per cent. Retail loans grew 16 per cent and accounted for 53 per cent of the net advances.   

The capital adequacy norm of the bank stood at 17.29 per cent. 

The bank’s results were declared after the market hours. On Tuesday, the bank’s stock had closed at Rs 446.20 a piece on BSE, up 2.86 per cent from its previous close.