Axis Bank Q1 profit down 46% to Rs 701 cr on rising bad loans

Private lender Axis Bank today reported a 46 per cent drop in net profit to Rs 701.09 crore for the April-June quarter due to increase in provisioning for bad loans.

The bank had registered a net profit of Rs 1,306 crore in the June quarter of 2017-18.

However, total income of the bank rose to Rs 15,702.01 crore during April-June quarter of the current fiscal, compared to Rs 14,052.30 crore in the year-ago period, Axis Bank said in a statement.

The net interest income for the quarter rose to 12 per cent to Rs 5,167 crore.

"The bank had significant recovery during the quarter from one large account through the NCLT process" Axis Bank CFO Jairam Sridharan said.

However, the bank did not disclose the recovery made from the stressed account in the steel sector.

The lender's asset quality worsened as gross non-performing assets (NPAs) rose to 6.52 per cent as on June 30 this year, from 5.03 per cent on June 30, 2017.

Likewise, net NPAs or bad loans increased to 3.09 per cent of advances furnished by June-end from 2.30 per cent a year earlier.

In absolute terms, gross NPAs rose at Rs 32,662.40 crore as on June 30, 2018 compared to Rs 22,030.87 crore a year earlier.

As a result, the provisions and contingencies of the bank increased to Rs 3,337.70 crore as compared to Rs 2,341.93 crore in the same quarter a year ago.

It further said the bank has recognised slippages of Rs 4,337 crore during the quarter.

"Corporate lending slippages stood at Rs 2,218 crores. 88 per cent of this came from disclosed BB & below accounts (rating). The bank's BB and below rated book stood at Rs 10,396 crore. This is 2.1 per cent of the bank's gross customer assets, and is down to less than 1/3rd of the 7.3 per cent peak reached in June 2016," it said.

Net interest margin (NIM) of the bank was 3.46 per cent at the end of quarter on account of one time large recovery made during the period.

Full year NIM would be broadly around the FY'18 level, he said.

The bank's balance sheet grew 14 per cent to Rs 6,92,686 crore as on June 30, 2018. The bank's advances grew 14 per cent to Rs 4,41,074 crore as on June 30, 2018. Retail advances rose by 21 per cent to Rs 2,11,648 crore.

The retail and SME continue to witness growth in the coming months, he added.

It is to be noted that bank is in the process of shortlisting candidates to succeed managing director (MD) and chief executive officer (CEO) Shikha Sharma.

She is slated to demit office on December 31, 2018.

Sharma had in April announced her decision to step down from the position of MD and CEO of the bank by the end of the year.

Sharma's term was to end in June 2021, with the board in December 2017 announcing a three-year extension of her term that was then to end in June 2018. However, RBI did not give its nod for further three-year extension.