Private sector lender Axis Bank has reported a whopping 83.1 percent degrowth in profit at Rs 319 crore for July-September quarter YoY, dented by big clean-up of bad loans. Provisions jumped more than 5-fold to Rs 3,623 crore compared with year-ago period.
Net interest income, the difference between interest earned and interest expended, grew by 11.1 percent year-on-year to Rs 4,514 crore on a 18 percent growth in advances despite fall in net interest margin.
“Retail advances grew 25 percent YoY, which accounted for 42 percent of the net advances while corporate credit grew 14 percent that accounted for 45 percent of net advances. SME advances growth was 14 percent while deposits growth was 17.31 percent,” the bank said.
Net interest margin dropped to 3.64 percent in Q2 from 3.79 percent in Q1FY17 and 3.85 percent in Q2FY16.
Operating profit during the quarter rose by 13 percent while other income (including fee and trading profits) or non-interest income showed a 24 percent growth on year-on-year basis.
Asset quality has seen a sharp rise in Q2, driven by watchlist. Gross non-performing assets (NPA) as a percentage of gross advances rose to 4.17 percent from 2.54 percent and net NPA climbed to 2.02 percent from 1.08 percent on sequential basis.
During the quarter, the bank added Rs 8,772 crore (fresh slippages) to gross NPAs, a significant rise compared with Rs 3,638 crore added in previous quarter. Recoveries & upgrades were Rs 1,073 crore and write-offs during the quarter were Rs 873 crore.
“Loans outstanding on the watchlist reduced 32 percent over the previous quarter and stood at Rs 13,789 crore. The reduction primarily represents slippages to NPAs amounting to Rs 7,288 crore, which comprised 89 percent of the total corporate credit slippages,” Axis Bank said in its filing.
With this, the watchlist has reduced to 3.5 percent of customer assets in September 2016, from 5.4 percent in June 2016 and 6.2 percent in March 2016.
In absolute terms, gross NPA shot up 71.4 percent quarter-on-quarter to Rs 16,378 crore and net NPA rose 93.5 percent to Rs 7,761 crore in July-September quarter.
The bank said net restructured assets in Q2 stood at Rs 6,702 crore against Rs 7,363 crore in previous quarter.
During the quarter, it sold assets with a net book value of Rs 1,128 crores to asset reconstruction companies against net sale consideration of Rs 822 crore comprising Rs 159 crore in cash and Rs 663 crore in security receipts value.