Axis Bank, the country's fourth-largest private sector lender by market capitalisation, posted a net profit of Rs 2,677 crore for the quarter ended March 2021 following a sharp decline in bad loan provisions. The bank reported a loss of Rs 1,387.8 crore in the year-ago period.
The number is also higher than CNBC-TV18 poll estimates of Rs 2,175.1 crore. 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 by 1 basis point YoY to 3.56 percent at the end of March 2021.
Axis Bank said its deposits grew by 10 percent on period-end basis and by 9 percent YoY on a quarterly average balance (QAB) basis, while the advances, including TLTRO investments, grew 12 percent YoY to Rs 6,41,794 crore as on March 2021.
The bank's loan-to-deposit ratio stood at 88 percent, improving by 109 bps YoY, while retail loans grew 10 percent YoY and accounted for 54 percent of the net advances, the bank added.
Domestic retail loans grew 11 percent YoY. "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," said Axis Bank.
Disbursements in the consumer segment were up 45 percent YoY, with secured segments like home loans up 73 percent YoY and loan against property (LAP) up 53 percent YoY, it added.
Corporate loan book, including targeted long-term repo operations (TLTRO) investments, grew by 16 percent YoY. As much as 85 percent of its corporate book is now rated A- and above, with 94 percent of incremental sanctions in FY21 being to corporates rated A- and above, said the bank.
Provisions and contingencies for the quarter stood at Rs 3,294.98 crore, registering a steep 57.4 percent decline compared to the year-ago period and 28.4 percent fall on the sequential basis.
Specific loan loss provisions for Q4FY21 were Rs 7,038 crore (including reclassification of NPA provision of Rs 4,266 crore on account of Supreme Court judgment shown as other provision in the prior quarter), compared to Rs 4,204 crore in Q4FY20, said Axis Bank.
During the quarter, the bank made additional provisions aggregating Rs 803 crore on account change in NPA provision rates on loans to commercial banking segment. Net of the two adjustments, specific loan loss provision for Q4 FY21 would have been Rs 1,969 crore, the bank added.
The bank held cumulative provisions (standard + additional other than NPA) of Rs 12,010 crore at the end of Q4FY21. These cumulative provisions translate to a standard asset coverage of 1.95 percent as of March 2021, said the bank.
Credit cost for the quarter ended March 2021 (net of CBG provisioning policy change) stood at 1.21 percent, improving compared to 2.77 percent at Q4FY20, it added.
On the asset quality front, gross non-performing assets as a percentage of gross advances increased to 3.70 percent as of March 2021 from 3.44 percent in the December quarter. Net NPA also climbed to 1.05 percent from 0.75 percent in the same period.
Gross slippages during the quarter were Rs 5,285 crore, lower compared to Rs 7,993 crore during Q3FY21. "Slippages from the loan book were at Rs 5,038 crore and that from investment exposures stood at Rs 247 crore," said Axis Bank.
Recoveries and upgrades from NPAs during the quarter were Rs 3,462 crore while write-offs were Rs 5,553 crore, the bank added.
Consequently, there were net slippages in NPAs (before write-offs) for the quarter of Rs 1,822 crore as compared to Rs 5,831 crore in Q3FY21, said the bank.
"The standard restructured loans under resolution framework for COVID-19 related stress as on March 2021 stood at Rs 1,848 crore that translates to 0.3 percent of the gross customer assets. The bank carries a provision of 26 percent on restructured loans, which is in excess of regulatory limits," the bank added.
Non-interest income (other income) grew by 17.1 percent year-on-year to Rs 4,668.3 crore in the quarter ended March 2021.
"Fee income for Q4FY21 stood at Rs 3,376 crore, up 15 percent YoY and 16 percent QoQ. Retail fees grew 16 percent YoY and 17 percent QoQ; and constituted 64 percent of the bank's total fee income. The trading profits and miscellaneous income for the quarter stood at Rs 789 crore and Rs 503 crore respectively," said Axis Bank in its BSE filing.
Pre-provision operating profit at Rs 6,864.65 crore increased 17.3 percent year-on-year in March quarter.
Profit for the financial year 2020-21 at Rs 6,588 crore grew 305 percent compared to Rs 1,627 crore in FY20. Net interest income during the year rose 16 percent to Rs 29,239 crore in the same period.
Axis Bank share price has rallied 13 percent in 2021, outshining the sectoral index Nifty Bank that has gained 3.23 percent.
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Mutual funds' shareholding in the bank reduced to 17.73 percent at the end of March 2021 from 17.95 percent as of December 2020, while foreign portfolio investors' stake increased to 51.43 percent from 51.02 percent in the same period.
The name of NPS Trust—A/C LIC Pension Fund Scheme—appeared in the shareholding pattern of March 2021, with a 1.03 percent stake.
