Axis Bank slumps on asset quality concerns

Axis Bank slumped 8.21% to Rs 478.50 at 15:15 IST on BSE after reports that a domestic brokerage pointed out underlying stress in asset quality of its big ticket loans.

The result was announced during market hours yesterday, 27 October 2015. The stock had risen by just 0.03% to Rs 521.30 yesterday, 27 October 2015.

Meanwhile, the S&P BSE Sensex was down 299.67 points or 1.10% at 26,953.77.

Huge volumes were traded on the counter. On BSE, so far 22.21 lakh shares were traded in the counter as against average daily volume of 7.15 lakh shares in the past one quarter.

The stock hit a high of Rs 495.70 and low of Rs 477 so far during the day. The scrip had hit a 52-week low of Rs 420.25 on 27 October 2014. The scrip had hit a record high of Rs 655.35 on 4 March 2015.

The stock had underperformed the market over the past one month till 27 October 2015, rising 1.47% compared with 5.37% rise in the Sensex. The scrip had also underperformed the market in past one quarter, dropping 6.2% as against Sensex's 1.12% fall.

The large-cap bank has equity capital of Rs 475.61 crore. Face value per share is Rs 2.

The brokerage reportedly pointed that impairment levels at Axis Bank are inching up significantly versus management's guidance. According to a post earnings research report of a domestic brokerage, Axis Bank sold loans aggregating about Rs 1820 crore to asset reconstruction companies (ARCs) for net consideration of about Rs 650 crore in Q2 September 2015. Axis Bank's gross slippages were Rs 589 crore or 1% of loans in Q2 September 2015 which was lower than gross slippages of Rs 1190 crore or 2.1% of loans in Q1 June 2015. However, adjusted for Rs 1820-crore sale to ARCs, gross slippages were about Rs 2400 crore or 4% of loans in Q2 September 2015, according to the brokerage.

Axis Bank's net profit rose 18.93% to Rs 1915.64 crore on 13.75% growth in total income to Rs 12001.01 crore in Q2 September 2015 over Q2 September 2014.

On absolute basis, Axis Bank's gross non-performing assets (NPAs) stood at Rs 4451.11 crore as on 30 September 2015 as against Rs 4251.18 crore as on 30 June 2015 and Rs 3613.10 crore as on 30 September 2014. The ratio of gross NPAs to gross advances stood at 1.38% as on 30 September 2015, same as 1.38% as on 30 June 2015 and 1.34% as on 30 September 2014. The ratio of net NPAs to net advances stood at 0.48% as on 30 September 2015, same as 0.48% as on 30 June 2015 and 0.44% as on 30 September 2014.

Axis Bank's provisions and contingencies declined 2.46% to Rs 707.17 crore in Q2 September 2015 over Q2 September 2014.

Axis Bank is one of the biggest private sector banks in India.

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