Axis Bank reports Rs 1,878-crore pre-tax loss in Q4 on Covid-19 provisions

the bank reported a 17 per cent increase in its operating profit at Rs 5,851 crore in the March quarter

Private sector lender Axis Bank on Tuesday reported a pre-tax loss of Rs 1,878.91 crore in the last quarter of this financial year (Q4FY20), against a pre-tax profit of Rs  2,303 crore in the year-ago quarter, on account of higher provisions made for Covid-19.
 

The bank recorded a net loss of Rs 1,388 crore in Q4FY20, compared to a net profit of Rs 1,505 crore in the same period last financial year.  However, the bank reported a 17 per cent increase in its operating profit to Rs 5,851 crore in the March quarter, from Rs 5,014.42 crore in the same period last year.
 

The lender registered a 19 per cent rise in net interest income to Rs 6,808 crore in Q4FY20, from Rs 5,706 crore in the year-ago period. Other income of the bank registered 13 per cent growth to Rs 3,985 crore with miscellaneous income reporting a 416 per cent rise, driven by higher recoveries, but fee income was down 3 per cent and trading income was down 25 per cent.

The net interest margin, a measure of profitability, of the bank stood at 3.55 per cent and for FY20 stood at 3.51 per cent.  The provisions made by the bank rose sharply by 185 per cent to Rs 7,730 crore in Q4FY20, from Rs 2,711.43 crore in the year-ago period, which includes Rs 3,000 crore provided for Covid-19, thereby taking the overall additional provisional held by the bank to Rs 5,983 crore. The bank has provided Rs 4,204 crore in Q4FY20 for bad loans, compared to Rs 1,714 crore in the same period last financial year.  The provision coverage ratio (PCR) of the bank improved to 69 per cent at the end of Q4FY20, against 62 per cent in Q4FY19.

The bank has recognised additional slippages of Rs 3,920 crore in Q4FY20 and has provided almost Rs 1,700 crore for the slippages. The slippages reported by the bank in Q4FY20 were much lower than the slippages reported in Q3FY20 to the tune of Rs 6,214 crore.

The gross non-performing assets (GNPA) improved to 4.86 per cent in Q4FY20, against 5.26 per cent in Q3FY20, while the net NPA improved to 1.56 per cent in Q4FY20, against 2.06 per cent in the year-ago period.
 

The management said Covid-19 impact on credit quality was unknown but they had tested robustness of the underwriting models and were fairly comfortable. It also said around 12 per cent of their customers had opted for the moratorium and in terms of value it was around 25 per cent.

The capital adequacy ratio of the bank stood at 17.53 per cent as of March 31, 2020 with CET 1 ratio at 13.34 per cent and the bank has no component of the capital maturing in the next 18 months.
 

The deposit base of the bank grew 19 per cent to Rs 6.4 trillion, while advances grew 15 per cent to Rs 5.71 trillion. The bank’s loan-to-deposit ratio stood at 89 per cent and retail loans grew 24 per cent accounting to Rs 3.05 trillion. The bank’s retail portfolio is about 53 per cent of the net advances.