Axis Bank reports Rs 1,683-cr net profit in Q2

Axis Bank on Wednesday reported a net profit of Rs 1,683 crore for the September quarter, against a Rs 112-crore loss in the year-ago period, on the back of a 20% year-on-year rise in net interest income to Rs 7,326 crore. The lender said it had not accepted any request for restructuring of loan accounts under the window for Covid-19 resolution till September 30, even as it provided Rs 1,864 crore in anticipation of “probable restructuring”.

The management declined to share details on the number of requests received for restructuring and said requests that were turned down were either technically ineligible or failed to demonstrate a hit to their income from the pandemic. “On the retail side, the way the process works is (that) the customer needs to establish for us with adequate documentary evidence the fact that there has been an impact on his cash flows, income or business model. Yes, there is a certain element of underwriting that happens in each of these individual cases,” the management said.

Apart from increased provisioning, Axis Bank has also internally downgraded some corporate accounts where it expects restructuring to be invoked. As a result, the book outstanding in the BB and below segment rose to Rs 14,254 crore at the end of September, from Rs 10,753 crore at the end of June.

Amitabh Chaudhry, MD and CEO, said, “We have proactively downgraded accounts into BB and below pool and made further Rs 3,143 crore of additional provisions. Twenty-five percent of that is based on routine downgrades and the balance is based on recasts on our conservative judgement call on what kind of requests could come to us in the next couple of months.”

The bank made specific loan loss provisions worth Rs 588 crore in Q2 and held additional provisions of around Rs 6,898 crore towards various contingencies at the end of Q1FY21. It has made incremental provisions of Rs 1,279 crore towards loans under moratorium and Rs 1,864 crore towards probable restructuring, aggregating to Rs 3,143 crore.

The net interest margin rose 18 basis points (bps) sequentially to 3.58%. Its advances, including targeted long-term repo operations (TLTRO) investments, grew 14% y-o-y to Rs 5.94 lakh crore. Retail loans grew 12% y-o-y to Rs 3.06 lakh crore and accounted for 53% of net advances. The corporate loan book, including TLTRO investments, grew 22% y-o-y.

The bank recognised slippages of Rs 931 crore during Q2FY21, compared to Rs 2,218 crore in Q1FY21 and Rs 4,983 crore in Q2FY20.

The bank saw an improvement on the asset quality front in Q2, with the gross non performing asset ratio falling 54 bps sequentially to 4.18% and the net NPA ratio falling 25 bps to 0.98%.

Under Basel III, the capital adequacy ratio and common equity tier-I ratios as on September 30, including profit, were 19.38% and 15.38%, respectively.