Axis Bank beats Street estimates, posts net profit of Rs 2,677 crore in Q4

Private sector lender Axis Bank has reported a net profit of Rs 2,677 crore in the March quarter of FY21, beating Street estimates, on account of lower provisions and good net interest income (NII).
 
In the same period of last financial year, the bank had reported a net loss of Rs 1,388 crore. Sequentially, the net profit of the lender is up 140 per cent.  Bloombeg analysts polled had pegged the net profit at Rs 1,912 crore.
 
NII of the lender is up 11 per cent to Rs 7,555 crore in Q4 of FY21 while other income increased by 17 per cent to Rs 4,668 crore during the same period. Net interest margin (NIM) stood at 3.5 per cent. Operating revenue in the reporting quarter went up 13 per cent to Rs 12,223 crore and operating profit is up by 17 per cent to Rs 6,865 crore.
 
Provisions and contingencies by the lender witnessed a steep drop of 57.4 per cent year-on-year (YoY) to Rs 3,294.4 crore while sequentially, it was down 28.4 per cent.
 
The bank, in its statement, said that specific loan loss provisions for Q4 of FY21 were to the tune of Rs 7,038 crore, which includes the reclassification of bad assets provision of Rs 4,266 crore.  Also, in the reporting quarter, the bank has made an additional provision of Rs 803 crore due to a change in non-performing asset (NPA) provision rates on loans to the commercial banking segment.
 

The bank holds cumulative provisions of Rs 12,010 crores at the end of Q4FY21.“We have concluded the exercise of building additional provisioning buffers in FY21. We do not believe that we will need to create any more such buffers this year. We are not sure how Covid-19 will pan out but we believe that we are adequately protected against future losses, the bank management said.
 
As far as asset quality is concerned, the bank’s gross NPA at the end of the March quarter stood at 3.7 per cent, down 85 basis points (bps). Net NPAs stood at 1.05 per cent, down 14 bps, sequentially. Its gross slippages during the quarter stood at Rs 5,285 crore compared to Rs 7,993 crore in Q3 of FY21 and Rs 3,290 crore in Q4 of FY20.
 
Provision coverage ratio of the bank in the March quarter stood at 72 per cent compared to 75 per cent in Q3 of FY21.
 
“The standard restructured loans under resolution framework for Covid-related stress as at March 31, 2021, stood at Rs 1,848 crore. That translates into 0.3 per cent of the gross customer assets. The bank carries a provision of 26 per cent on restructured loans, which is in excess of regulatory limits,” it said in a statement.
 
While deposits of the lender went up 10 per cent YoY to Rs 7.07 trillion, total advances, including TLTRO investments, grew by 12 per cent to Rs 6.41 trillion, with retail loans growing at 10 per cent YoY to Rs 3.34 trillion. It accounted for 54 per cent of the net advances of the bank and corporate loans grew by 16 per cent. “Retail disbursements touched new all-time highs, led by higher contribution from the secured loan segments,” the bank said.
 
“The spread of the second wave of Covid has now intensified throughout the country. The interplay of the pandemic and the mobility restrictions will have an impact on economic growth,” said Amitabh Chaudhry, managing director (MD) & chief executive officer (CEO), Axis Bank.
 
“From a business perspective, these are early days but we do see an immediate business impact across segments. Corporates are adopting a wait-and-watch approach. We have not seen any slowdown in the early bucket collections but this is likely to get impacted in the coming weeks. A disruption like this does provide an opportunity and we would like to grow in our focus segments. Our balance sheet is strong, we have taken upfront provisions and we have more than sufficient buffers built-in,” he added.