Axis bank Q1 profit falls 19%

The country's third-largest private sector lender Axis Bank has reported an 18.8 percent year-on-year decline in standalone profit for the June quarter, impacted by lower other income and higher provisions.

Profit during the quarter declined to Rs 1,112.17 crore compared to Rs 1,370.08 crore in the corresponding period last year.

Net interest income (NII) grew by 19.5 percent year-on-year to Rs 6,985.3 crore in the quarter, with a strong loan growth of 17 percent (including TLTRO investments) and deposits growth of 19 percent on quarterly average basis (QAB).

The private lender's savings account deposits grew 15 percent YoY, current account deposits 8 percent and retail term deposits (RTD) were up 27 percent on QAB basis, while including TLTRO (Targeted Long Term Repo Operations) investments, corporate loans grew 26 percent and retail loans 16 percent.

Other income or non-interest income (comprising fee, trading profit and miscellaneous income) for Q1FY21 declined 33.1 percent to Rs 2,587 crore YoY as fee income fell 38 percent YoY to Rs 1,651 crore, the bank said. The bank attributed the decline in fees to lower business volumes and velocity of throughput of transactions.

Pre-provision operating profit (PPoP) declined 0.8 percent to Rs 5,844.4 crore compared to the corresponding quarter of the last fiscal.

"Adjusted for accounting policy changes and NII reserves created during the quarter, NII, operating profit and PAT for the quarter would have been Rs 7,100 crore, Rs 6,151 crore and Rs 1,626 crore, respectively, growing by 22 percent, 4 percent and 19 percent YoY, respectively," Axis Bank said in its BSE filing.

Asset quality has seen improvement on sequential as well as yearly basis. Gross non-performing assets as a percentage of gross advances declined 14 bps QoQ to 4.72 percent and net NPAs dropped 33 bps QoQ to 1.23 percent in June quarter 2020.

Axis Bank said it recognised slippages of Rs 2,218 crore during Q1FY21, compared to Rs 3,920 crore in Q4FY20.

"Slippages from the loan book were at Rs 2,011 crore and that from investment exposures stood at Rs 207 crore. Corporate slippages stood at Rs 1,355 crore. Recoveries and upgrades from NPAs during the quarter were Rs 608 crore while write-offs were Rs 2,284 crore," it added.

Provisions and contingencies were higher by 15.8 percent to Rs 4,416.42 crore at the end of June quarter 2020, but were lower by 42.9 percent compared to the March quarter.

The bank said it had made incremental provisions of Rs 733 crores in Q1 FY21 towards COVID-19. "In June 2020, the bank holds in aggregate additional provisions of Rs 6,898 crore. It is pertinent to note that this is over and above the NPA provisioning included in our PCR calculations, and the 0.4 percent standard asset provisioning requirement on standard assets."