 "Axis Bank to raise $500 mn in Tier-II bonds")
Axis Bank is planning to raise $500 million (approximately Rs 3,350 crore) through Tier-II capital bonds to shore up its capital base.
“Our capital adequacy may fall … but Tier-I continues to be strong and higher than what we were, even at the point of raising capital three years ago,” said V Srinivasan, Deputy Managing Director, Axis Bank, at an analysts’ conference call. “The Tier-II (capitals) which we had raised, possibly because of amortisation, clearly would sort of trend down and we can raise Tier-II at any point of time. There is enough head room available for us to raise Tier-II.”
According to the Basel-III norms, the capital adequacy ratio (CAR) and Tier-I CAR of the bank at the end of December quarter stood at 15.47 per cent and 12.35 per cent, respectively. On the other hand, Tier-II capital stood at 3.12 per cent as against 3.21 per cent at the end of the September quarter. The Tier-II capital has also come down on an year-on-year basis from 3.20 per cent at the end of December quarter last financial year.
In September last year, the lender had raised Rs 1,500 crore via Tier-II bonds. These bonds were rated AAA by CRISIL, CARE and Icra.
Analysts said the rise in provisioning would have had also affected the capital adequacy ratio. In the quarter ended December, provisions and contingencies increased to Rs 712.59 crore from Rs 507.15 crore in the corresponding period a year earlier. The loan loss provisioning for the third quarter was Rs 626 crore against Rs 362 crore during the year-ago period. The bank had used Rs 220 crore for provisioning purpose from its contingency pool.
This was on the back of an increase in bad loans. The bank has witnessed further pressure on asset quality with the gross non-performing assets (GNPA) increasing to 1.68 per cent against 1.38 per cent in the quarter ended September. GNPA inched up 34 basis points as compared with the third quarter of the last financial year.
As on December 31, 2015, the bank’s GNPA was Rs 5,724 crore against Rs 4,451 crore as on September 30, 2015. During the quarter, the bank added Rs 2,082 crores to Gross NPAs, and Recoveries and upgrades were Rs156 crores. Net NPA also increased to 0.75 per cent from 0.44 per cent in the corresponding quarter last year.
“Our capital adequacy may fall … but Tier-I continues to be strong and higher than what we were, even at the point of raising capital three years ago,” said V Srinivasan, Deputy Managing Director, Axis Bank, at an analysts’ conference call. “The Tier-II (capitals) which we had raised, possibly because of amortisation, clearly would sort of trend down and we can raise Tier-II at any point of time. There is enough head room available for us to raise Tier-II.”
According to the Basel-III norms, the capital adequacy ratio (CAR) and Tier-I CAR of the bank at the end of December quarter stood at 15.47 per cent and 12.35 per cent, respectively. On the other hand, Tier-II capital stood at 3.12 per cent as against 3.21 per cent at the end of the September quarter. The Tier-II capital has also come down on an year-on-year basis from 3.20 per cent at the end of December quarter last financial year.
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Another person familiar with the development said the bank was looking to raise about $500 million. “Even though the timeline for the issue has not been decided, we are likely to do it either in the March-ended quarter or by the first quarter of the next financial year,” he added.
In September last year, the lender had raised Rs 1,500 crore via Tier-II bonds. These bonds were rated AAA by CRISIL, CARE and Icra.
Analysts said the rise in provisioning would have had also affected the capital adequacy ratio. In the quarter ended December, provisions and contingencies increased to Rs 712.59 crore from Rs 507.15 crore in the corresponding period a year earlier. The loan loss provisioning for the third quarter was Rs 626 crore against Rs 362 crore during the year-ago period. The bank had used Rs 220 crore for provisioning purpose from its contingency pool.
This was on the back of an increase in bad loans. The bank has witnessed further pressure on asset quality with the gross non-performing assets (GNPA) increasing to 1.68 per cent against 1.38 per cent in the quarter ended September. GNPA inched up 34 basis points as compared with the third quarter of the last financial year.
As on December 31, 2015, the bank’s GNPA was Rs 5,724 crore against Rs 4,451 crore as on September 30, 2015. During the quarter, the bank added Rs 2,082 crores to Gross NPAs, and Recoveries and upgrades were Rs156 crores. Net NPA also increased to 0.75 per cent from 0.44 per cent in the corresponding quarter last year.