 "Axis Bank tanks 7% as asset quality worsens in Q2")
Axis Bank dipped 7% to Rs 475 on the BSE in early morning trade after the bank’s asset quality worsen in July-September 2017 quarter (Q2FY18).
The bank’s gross non-performing assets (NPAs) and net NPAs stood at 5.9% and 3.12% in Q2FY18 against 5.03% and 2.30% in Q1FY18, respectively. In the year-ago quarter, gross NPAs were at 4.17% and net NPA were at 2.02% of the loan book.
Asset quality numbers worsened significantly on the Reserve Bank of India’s (RBI’s) assessment of its previous financial year numbers. According to rules, if the RBI’s assessment of bad debt numbers for a financial year differs from the bank’s assessment by more than 15%, the divergence should be disclosed.
However, the bank reported 36% year-on-year growth in its second-quarter net profit, aided by low provisioning. Profit for the quarter stood at Rs 432 crore, against Rs 319 crore in the year-ago quarter. Gross slippages or good assets turning bad, in the quarter rose significantly to Rs 8,936 crore, of which Rs 8,110 crore was in the corporate sector. Total slippages in the June quarter were at Rs 3,519 crore.
“High slippages in the quarter were driven by divergence assessment. Slippages largely from the low rated pool of stressed accounts. The sizeable reduction in stressed pool improves our confidence in the trajectory of the Bank’s credit costs,” Axis Bank said in a statement.
The bank’s gross non-performing assets (NPAs) and net NPAs stood at 5.9% and 3.12% in Q2FY18 against 5.03% and 2.30% in Q1FY18, respectively. In the year-ago quarter, gross NPAs were at 4.17% and net NPA were at 2.02% of the loan book.
Asset quality numbers worsened significantly on the Reserve Bank of India’s (RBI’s) assessment of its previous financial year numbers. According to rules, if the RBI’s assessment of bad debt numbers for a financial year differs from the bank’s assessment by more than 15%, the divergence should be disclosed.
However, the bank reported 36% year-on-year growth in its second-quarter net profit, aided by low provisioning. Profit for the quarter stood at Rs 432 crore, against Rs 319 crore in the year-ago quarter. Gross slippages or good assets turning bad, in the quarter rose significantly to Rs 8,936 crore, of which Rs 8,110 crore was in the corporate sector. Total slippages in the June quarter were at Rs 3,519 crore.
“High slippages in the quarter were driven by divergence assessment. Slippages largely from the low rated pool of stressed accounts. The sizeable reduction in stressed pool improves our confidence in the trajectory of the Bank’s credit costs,” Axis Bank said in a statement.
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%