Moneycontrol Bureau
Axis Bank's first quarter (April-June) earnings disappointed the street on all counts with the profit falling 21.4 percent to Rs 1,555.5 crore on yearly basis, impacted by sharp surge in provisions. However, it was supported by other income and operating profit.
Net interest income, the difference between interest earned and interest expended, grew by 11.4 percent to Rs 4,516.92 crore in the quarter ended June 2016 compared with Rs 4,056.23 crore in same period last fiscal.
The bank said net advances grew 21 percent YoY, led by retail, which grew 24 percent YoY and followed by corporate credit which grew 21 percent YoY.
Net interest margin declined on sequential basis to 3.79 percent from 3.97 percent.
Net profit was estimated at Rs 1,933.4 crore and net interest income at Rs 4,582.4 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.
Other income (non-interest income) jumped 19 percent to Rs 2,738.3 crore driven by fee income and trading profits on yearly basis.
Fee income for Q1FY17 grew 11 percent YoY to Rs 1,719 crore. The key driver of fee income growth was retail banking, which increased 19 percent YoY and constituted 42 percent of the bank's total fee income. Trading profits for the quarter grew 41 percent YoY to Rs 911 crore, the bank said.
Operating profit grew by 9.2 percent to Rs 4,469.4 crore compared with year-ago period.
Provisions for bad loans increased sharply by 88.7 percent on yearly basis and 81.2 percent sequentially to Rs 2,117.17 crore in the quarter ended June 2016.
Asset quality deteriorated during the quarter as gross non-performing assets (NPA) climbed 87 basis points to 2.54 percent and net NPAs rose 38 basis points to 1.08 percent in sequential basis, driven by slippages from the watch list.
Watch list loans as on June 30, 2016 reduced 10 percent quarter-on-quarter and stood at Rs 20,295 crore. The reduction in the watch list primarily represents slippages to NPAs amounting to Rs 2,680 crore, which comprises 92 percent of the total corporate credit slippages," the private sector lender said.
On absolute basis, gross NPAs jumped 57 percent to Rs 9,553.17 crore and net NPAs shot up 59 percent to Rs 4,010.23 crore compared with preceding period.
During the quarter, the bank added Rs 3,638 crore to gross NPAs; recoveries and upgrades were Rs 140 crore and write-offs during the quarter were Rs 32 crore.
Axis Bank said the cumulative value of net restructured assets at the end of June 2016 stood at Rs 7,363 crore, constituting 1.99 percent of net customer assets, compared to Rs 8,072 crore, constituting 2.25 percent of net customer assets at the end of March 2016.
The scrip of Axis Bank closed at Rs 537.55, down 0.13 percent ahead of earnings that announced after market hours. In fact, the stock fell 5.7 percent in last four consecutive sessions.
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