Axis Q4 net falls 1.2% YoY to Rs 2154cr; NII up 19.8% to 4552cr

Excerpts from the conversation.

Ekta: Your first take on the Axis Bank’s numbers?

Bhat: Well, the operating income seems to be kind of on the stronger side, but the profit is on the lower side quite some bid of noise as far as our estimates were concerned. Looks like the provisioning has been quite strong, it’s Rs 1,168 crore, if I am seeing the number correct that I have in front of me. So even if I have to look at it on a quarter-on-quarter (QoQ) basis it’s gone up substantially that explains the miss at the profit line that we are seeing. Its lower 5 percent than what we had expected, but let’s wait for what, especially, after the Reserve Bank of India (RBI) communicate that stated that some accounts could be exempted, probably that has had some effect. We were also looking at one food credit related accounts may be some provisioning has also coming off because of that.

Latha: Did you expect this good level of recoveries?

Joshi: Not at all. At least on the recovery front exceptional set of numbers. However of you look at the absolute numbers Rs 160-170 crore odd is not a huge number in terms of the balance sheet that Axis Bank carries at this point of time. So, the street will take that into its stride. What will probably take place is the management commentary going forward in terms of what the restructured pipeline is looking like, what they are looking in terms of credit costs going forward in the system and what happens to the corporate / SME accounts as well.

Latha: The bank’s gross non-performing asset (NPA) is Rs 6,088 crore is about 5 percent more than the Rs 5,724 crore as of December 31 and during the quarter they added Rs 1,474 crore, basically around Rs 1,500 crore in the form of fresh slippages and that compares to Rs 2,087 crore that they added last time, so it’s a good Rs 600-700 crore less than what they added in the third quarter. Recoveries and upgrades were aggressively higher at Rs 780 crore and that compares to Rs 156 crore last quarter, so it’s a usually in the fourth quarter recoveries are higher, but this is a substantially higher recovery number which may makes the overall gross non-performing loan (NPL ) and net NPL lower because you deduct that much by way of write-offs. The write-offs go straight away to the profit because they usually provide at for loans and that’s the bank sold Rs 349 crore of outstanding NPLs to an asset reconstructing company (ARC) for Rs 110 crore, so they have taken a haircut of Rs 250 crore and they have recognised that. Rs 110 crore was the consideration, cash consideration was Rs 25 crore and the remaining came as security receipts. So, basically it’s almost a write-off about Rs 350 crore, they got Rs 25 crore cash. That much the security receipts if they are revamped will give some money, but if those assets are not revamped they are just papers. Okay that’s the sum and substance first thoughts.

Joshi: So again slippages are little bit higher than what we had estimated. We went by the management commentary of Rs 1,300 odd crore to come through in terms of fresh slippages. In terms of how the gross NPAs has panned out, other I think is more to do with how the numbers were expected to come through this write-down, so largely if you adjust for the recovery and update as the numbers that you are just telling me, the numbers largely look quite okay basically in terms of how the gross NPA has panned out.