Axis Bank’s Q3 profit falls 73%
Private lender Axis Bank on Thursday reported a 73.3 per cent fall in net profit at Rs 580 crore for the third quarter ended December 2016 due to higher provisioning for bad loans.
Net interest income (NII) during the quarter grew by 4.1 per cent to Rs 4,333.73 crore compared to Rs 4,162.06 crore in the same period of the previous year. Other income (comprising fee, trading profit and miscellaneous income) stood at Rs 3,400 crore as against Rs 2,338 crore during the same period last year.
The gross NPA and net NPA rose to 5.22 per cent and 2.18 per cent respectively in the period under review as against 4.17 per cent and 2.02 per cent respectively as on September 30, 2016.
The bank’s provision coverage, as a proportion of gross NPAs including prudential write-offs, improved to 64 per cent from 60 per cent in September quarter. During the reporting period, slippages were Rs 4,560 crore, down from Rs 8,772 crore sequentially.
The watch list has come down to 2.8 per cent of customer assets from 3.5 per cent in September.
Speaking at an earnings concall, Jairam Sridharan, chief financial officer of Axis Bank said he expects FY17 to be the peak for credit cost in this credit cycle. The bank’s balance sheet grew 15 per cent y-o-y and stood at Rs 578,763 crore. Advances grew 10 per cent y-o-y to Rs 347,175 crore. Retail advances grew 19 per cent and stood at Rs 149,538 crore and accounted for 43 per cent of the net advances. Corporate credit grew 4 per cent to Rs 154,429 crore and accounted for 44 per cent of the net advances. SME advances grew 5 per cent and stood at Rs 43,208 crore.
Siddharth Purohit, senior equity research analyst (banking) at Angel Broking), said, “Axis Bank’s results for the quarter were below expectations due to higher provisions. However, the good part is that slippages for the quarter remained lower quarter-on-quarter and the overall watch list got reduced. We believe though the next two quarters could be challenging for the bank.”