Axis Bank Q3 net profit misses Street estimates, up 5% YoY at Rs 1,757 cr

On the asset quality front, the Mumbai-based bank reported gross non-performing assets at Rs 30,073 crore for the recently concluded quarter. This was up 3.4 per cent QoQ

Private lender Axis Bank on Wednesday was back in the black during the December quarter of FY20, with its standalone net profit surging 4.52 per cent year-on-year (YoY) to come in at Rs 1,757 crore. The profit was Rs 1,680.9 crore in the corresponding quarter of the previous fiscal (Q3FY19).  On a consolidated basis, the net profit was Rs1,884 crore.

The lender had reported a loss of Rs 112.1 crore in the September quarter of FY20 on account of one-time mark-down of deferred tax asset (DTA).

The number missed street estimates by huge margin.

Analysts at Prabhudas Lilladher foresaw the bank’s net profit rising 61 per cent YoY, as against Rs 1,680.9 crore profit posted in Q3FY19, after adjusting complete mark-down of deferred tax asset (DTA) in the previous quarter. 

Other brokerage firms, however, estimated the net profit rising between 16 per cent and 51 per cent. IDBI Capital, for instance, pegged the numbers at Rs 1,943.1 crore, up 15.6 per cent YoY while those at IndiaNivesh estimated a 45 per cent YoY rise at Rs 2,438.7 crore. Analysts at ICICI Securities, meanwhile, estimated the number at Rs 2,534 crore, up 51 per cent YoY.

It’s standalone net interest income – the difference between the interest earned and expended – stood at Rs 6,452.98 crore, a jump of 15.15 per cent YoY, over an NII of Rs 5,603.7 crore clocked in Q3FY19. Sequentially, the number was higher by 5.75 per cent over Rs 6,101.8 crore (Q2FY20). The net interest margin came in at 3.57 per cent.

“Operating profit for Q3FY20 stood at Rs 5,743 crores. Adjusted for a previously disclosed one-off recovery of Rs 800 crore in Q3FY19, Operating Profit grew 22 per cent YOY,” said the management in a statement.

ASSET QUALITY WORSENS

On the asset quality front, the Mumbai-based bank reported gross non-performing assets (GNPA) at Rs 30,073 crore for the recently concluded quarter. This was 3.4 per cent higher from the GNPAs reported in the previous quarter at Rs 29,071.39 crore. In Q3FY19, the GNPA stood at Rs 30,854.67 crore. 

The net NPA, meanwhile, came in at Rs 12,160 crore, up 9.1 per cent QoQ. The amount was Rs 11,138.30 crore in the December quarter of FY19.

In terms of ratio, the GNPA ratio stood at 5 per cent, as against 5.03 per cent reported in Q2FY20, and 5.75 per cent in Q3FY19. The NNPA ratio came in at 2.09 per cent.
 
As for slippages from the loan book, they came in at Rs 5,124 crores. In addition, slippages from the Investment book were at Rs 1,090 crores, largely from one Housing Finance Company account, the bank said.

"Gross corporate slippages for the quarter (including investment portfolio) stood at Rs 3,891 crores, of which 81 per cent came from clients previously rated BB and below. Outstanding BB & Below corporate loans declined by 18% QOQ to Rs 5,128 crores," it said in a statement.

It added: The Bank has recognized slippages of Rs 6,214 crores during Q3FY20 (up 24.7 per cent QoQ, and 65.88 per cent YoY), compared to Rs 4,983 crores in Q2FY20 and Rs 3,746 crores in Q3FY19. Slippages from the loan book were at Rs 5,124 crores and that from investment exposures stood at Rs 1,090 crores. Corporate slippages stood at Rs 3,891 crores. 

For the quarter under review, the bank created provision of Rs 3,470.92 crore, down 1.34 per cent QoQ from Rs 3,518.4 crore (Q2FY20). On a YoY basis, the number was 13.63 per cent higher from Rs 3,054.5 crore logged in Q3FY19.

The number missed Street’s expectations which were anticipating a decline in provisions by over 8 per cent YoY. Analysts at Prabhudas Lilladher, for instance, had pegged the provision at Rs 2,800 crore.

"Specific Loan Loss Provisions for Q3FY20 were Rs 2,962 crores, compared to Rs 3,352 crores in Q3 last year and Rs 2,701 crores in Q2FY20. Including provisions for standard assets and other provisions, total provisions were Rs 3,471 crores," it said.

LOAN BOOK

The bank's loan book for the quarter ended December 31, 2019 grew by almost Rs 28,500 crores sequentially. Of this domestic loan growth stood at 18 per cent YoY. Among this, retail loan book grew 25 per cent YoY, and domestic corporate book grew 16 per cent YoY.

According to the management, total deposits jumped 21 per cent YoY (quarterly average basis). While Savings Accounts grew 12 per cent (quarterly average basis), Current Account-Savings Account (CASA) and Retail Term Deposits (RTD) together were up 21 per cent YoY on QAB basis. CASA ratio stood at 40 per cent on QAB basis.

Shares of Axis Bank hit a high of Rs 722.6 apiece on the BSE in the intra-day trade today. At close, the stock was 1.08 per cent lower at Rs 710. In comparison, the benchmark S&P BSE Sensex settled 209 points, or 0.5 per cent lower at 41,115 level.

During the quarter under review, the counter has outperformed the benchmark S&P BSE Sensex by surging 10.12 per cent, as against a 6.6 per cent gain in the index.