Axis Bank logs net profit of Rs 1,683 cr in Q2; NII up 20% to Rs 7,326 cr

Axis Bank has reported a net profit of Rs 1,683 crore in the second quarter of 2020, compared to a loss of Rs 112 crore in the same period last financial year, aided by a healthy growth in net interest income (NII). The bank reported net profit of Rs 1,112 crore in the first quarter.

NII has grown 20 per cent to Rs 7,326 crore in the July-September quarter of FY21, compared to Rs 6,102 crore in the corresponding period of last financial year.

Net interest margin of the lender in the reporting quarter was 3.58 per cent against 3.51 per cent in Q2 of the previous year. The bank’s fee income grew 4 per cent year-on-year (YoY) and 67 per cent sequentially to Rs 2,752 crore. The key driver of fee income growth was retail fees.

Total provisions and contingencies made by the lender was up more than 3 per cent sequentially to Rs 4,581 crore in Q2. But loan loss provisions of the lender came down significantly to Rs 588 crore in Q2, against Rs 3,512 crore in Q1. The bank has made incremental provisions of Rs 1,279 crore towards loans under moratorium and Rs 1,864 crore towards probable restructuring, aggregating to Rs 3,143 crore.

The lender is holding aggregate additional provisions to the tune of Rs 10,389 crore as of September 30.

Asset quality of the lender has improved both sequentially and YoY. Gross NPA of the bank stood at 4.18 per cent in Q2, compared to 4.72 per cent in the previous quarter. Net NPAs of the bank has fallen 25 basis points to 0.98 per cent in the reporting quarter.

The bank has said, except for the Supreme Court’s interim order on classification of accounts, its gross NPA would have been 4.28 per cent and net NPA 1.03 per cent. The proforma gross NPA value is Rs 641 crore.

So far (as of September 30), the bank management has said restructuring requests which have come are negligible and the bank has not granted any restructuring request as of now.

The bank management did not disclose the number of queries it received for restructuring, however.

Slippages of the bank has come down sequentially to Rs 931 crore in the current quarter, compared to Rs 2,218 crore in Q1. The bank disclosed that around Rs 37,397 crore worth of loans that were special mention accounts (SMAs) or overdue were granted moratorium.

As of September 2020, provision coverage ratio of the lender stood at 77 per cent, compared to 62 per cent in Q2 last year and 75 per cent in Q1 this year.

Advances of the bank increased 14 per cent YoY to Rs 5.94 trillion, including the targeted long term repo operation or TLTRO investments. 

Retail loans have grown 12 per cent YoY and 2 per cent sequentially to Rs 3.05 trillion.

The bank said segments like home loan, loan against property, and auto saw disbursals return to 85-90 per cent of September 2019. “We are far more confident and optimistic about growth on the retail side,” the bank management added.

H2 of FY21 should be far better than the previous quarter as far as system credit growth is concerned,” the bank added. Deposits of the lender increased 9 per cent YoY to Rs 6.35 trillion.

Capital adequacy ratio of the bank at the end of Q2 of this financial year is 18.92 per cent. Shares of the lender closed 0.71 per cent lower at Rs 504.85 on the BSE.