Axis Bank, the fourth largest private sector lender by market capitalisation, has reported a significant 36.4 percent year-on-year (YoY) decline in standalone profit for the quarter ended December 2020 with elevated provisions (up 33 percent YoY).
The profit for the quarter stood at Rs 1,116.6 crore against Rs 1,757 crore in the corresponding period.
"Reported profits after tax for the quarter are adversely impacted to the extent of around Rs 1,050 crore on account of prudent expenses and provisioning charges during the quarter," the bank said in its BSE filing.
Provisions and contingencies increased considerably to Rs 4,604.28 crore in Q3FY21, rising 32.7 percent compared to corresponding period and half a percent over previous quarter.
"Specific loan loss provisions for Q3FY21 were Rs 1,053 crore, compared to Rs 2,962 crore in Q3 last year," said Axis Bank which has made provisions on 90+ DPD (day past due) accounts not classified as NPA pursuant to the Supreme Court judgement, at rates that would have applied to these accounts per extant provisioning rules for NPA in the banks, amounting to Rs 3,899 crore during the quarter.
The bank further said it held cumulative provisions (standard + additional other than NPA) of Rs 11,856 crore at the end of Q3FY21. "These cumulative provisions translated to a standard asset coverage of 2.08 percent as on December 2020."
Net interest income, the difference between interest earned and interest expended, grew by 14.3 percent year-on-year to Rs 7,372.76 crore in Q3FY21, with net loan growth at 6 percent YoY. NII in Q3FY20 was at Rs 6,452.98 crore.
Deposits in Q3FY21 increased 11 percent to Rs 6.54 lakh crore compared to corresponding period.
On the asset quality front, gross non-performing assets (as a percentage of gross advances) declined 74 bps sequentially to 3.44 percent in Q3FY21, while the net NPA dropped 24 bps QoQ to 0.74 percent in same period.
"The gross NPA ratio as per said IRAC norms (Income Recognition and Asset Classification) as on December 2020 would have been 4.55 percent and net NPA ratio would have been 1.19 percent. This reflects decline of 45 bps and 90 bps, respectively on a YoY basis and an increase of 27 bps and 16 bps on NPA and NPA, respectively on a sequential basis," Axis Bank said.
The bank further said gross slippages during the quarter per IRAC norms were Rs 6,736 crore, compared to Rs 1,572 crore during Q2FY21 and Rs 6,214 crore in Q3FY20. Slippages from the loan book per IRAC norms were at
Rs 6,499 crore and that from investment exposures stood at Rs 236 crore.
As on December 2020, the bank's provision coverage, as a proportion of gross NPAs stood at 79 percent, improving from 77 percent as on September 2020.
Non-interest income (other income) at Rs 3,776.04 crore declined third of a percent compared to corresponding period due to only 5 percent growth in fee income (which contributed 77 percent to total non-interest income) and 29 percent decline YoY in trading income.
Pre-provision operating profit grew by 6.1 percent year-on-year to Rs 6,095.51 crore in Q3FY21. "Core operating profit for the quarter grew 10 percent YoY to Rs 5,754 crore," the bank said.
Last week, the Competition Commission of India approved the acquisition of 19.002 percent stake in Max Life Insurance Company by Axis Bank and its subsidiaries (Axis Capital and Axis Securities), after revised agreements signed by all entities in October last year.
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The stock fell 4 percent during the day ahead of quarterly earnings. Shares rallied 46 percent in October-December period last year, but fell 18 percent in full year 2020.(This is a developing story. Check back for updates)