Axis Bank (Representative image)
Private lender Axis Bank has received Rs 3,004 crore worth loan recast requests under the COVID resolution framework of which Rs 623 crore is implemented so far, the top management said in a conference call on April 27 after the announcement of the Q4 financial results.
Of the Rs 3,004 crore worth requests received, loan restructuring has been invoked for Rs 1,848 crore worth of loans, of which Rs 623 crore is implemented in Q4. Including the loans under the MSME loan restructuring scheme, the bank restructured loans worth Rs 845 crore as on March 31.
Loan restructuring refers to relaxing the repayment terms of the borrower. This could include a reduction in the interest rate or elongation of the repayment period. Last year, the Reserve Bank of India (RBI) allowed banks to restructure loans to help borrowers who suffered due to the COVID-19 impact. That apart, there is a separate loan restructuring scheme for MSME loans.
With respect to the remaining chunk of loans invoked for restructuring, the bank will decide within June 30, Axis Bank CEO Puneet Sharma said at the call. The bank expects some near-term impact from COVID-19 second wave but will look for growth opportunities in both secured and unsecured book, the management said.
Loan growth robust
Retail loans grew 10 percent on a year-on-year basis and 7 percent on a quarter-on-quarter basis (Q-O-Q) and accounted for 54 percent of the net advances of the bank. Domestic retail loans grew 11 percent YOY and 7 percent on a quarterly basis.
Within the loan book, the share of secured loans was 81
percent with home loans comprising 36 percent of the retail book. Retail disbursements touched new all-time highs led by higher contribution from secured loan segments. Disbursements in the consumer segment were up 45 percent YOY and 44 percent Q-O-Q, with secured segments like home loans up 73 percent YOY and 45 percent Q-O-Q, the bank said.
Generally, banks have turned risk averse as the pandemic has impacted the loan repayment ability of the borrowers. Banks are now increasingly focusing on retail loans compared with risky corporate debt.
Asset quality improves
Axis bank has seen an improvement on the asset quality front. The gross non-performing assets (GNPAs), as a percentage of gross advances, increased to 3.70 percent as of March 2021, from 3.44 percent as of December 2020. Net NPA also climbed to 1.05 percent from 0.75 percent in the same period.
Axis Bank has aggressively provided for likely losses due to COVID. It has made a cumulative provision of Rs 12,010 crore at the end of Q4FY21. “It is pertinent to note that this is over and above the NPA provisioning included in our PCR calculations. These cumulative provisions translate to a standard asset coverage of 1.95 percent as on 31 st March, 2021. On an aggregated basis, our provision coverage ratio stands at 120 percent of GNPA as on 31st March, 2021,” the bank said.
During the quarter, the bank posted a net profit of Rs 2,677 crore for the quarter ended March 2021 following a sharp decline in bad loan provisions, beating CNBC-TV18 poll estimate which pegged it at Rs 2,175.1 crore for the quarter. The bank reported a loss of Rs 1,387.8 crore in the year-ago period. The double-digit growth in net interest income, non-interest income and pre-provision operating profit also boosted profitability.
Net interest income, the difference between interest earned and interest expended, grew 11 percent to Rs 7,555 crore in Q4FY21 compared to Rs 6,807.7 crore in Q4FY20, with net interest margin expanding 1 basis point YoY to 3.56 percent at the end of March 2021.