Axis Bank expects the coming fiscal to be a better year, with most problems relating to asset quality behind, its top management said in a media call after announcing the third quarter earnings. "Next year will be a ‘look forward’ year for us," Axis Bank’s managing director and chief executive officer Amitabh Chaudhry said.
The private sector lender reported a 36 percent drop in profits for the quarter ending December as it increased provisions. The bank kept aside Rs 1,050 crore for specific loan loss provisions during the quarter, and the cumulative provisioning increased to Rs 4,604 crore compared to Rs 3,471 core in the same period last year.
"We want to take a conservative stance, which stands to scrutiny, one that is seen as not cutting corners," Chaudhry said, adding that the bank has provided as if the Supreme Court order, staying the downgrade of accounts into the non-performing category, did not exist. "We just want to ensure our P&L reflects what we see today and we intend to maintain that stance," he said.
Axis Bank’s reported gross NPA stood at 3.44 percent and reported net NPA at 0.74 percent in the December quarter, as against 4.18 percent and 0.98 percent during the September quarter. The numbers do not reflect the actual stress on the balance sheet because of the Supreme Court order. The bank disclosed that as per RBI’s Income Recognition and Asset Classification (IRAC) norms, its gross NPA would have been 4.55 percent and net NPA at 1.19 percent.
The bank said its gross slippages, or addition to bad loans, for the quarter were almost nil due to SC standstill order. Under the IRAC norms, however, its gross slippages would be Rs 6,736 crore for the December quarter compared to Rs 1,572 crore in the previous quarter, and Rs 6,214 crore in the same period last year. Punit Sharma, the chief financial officer of Axis Bank said 83 percent of the slippages are from the bank’s retail book.
The restructured loans under RBI’s August 6 window stood at Rs 2,709 crore or 0.42 percent of its gross customer assets as of December 31. Of this, the implemented restructured book stood at Rs 396 crore or 0.1 percent of gross customer assets.
As a percentage of the respective loan book, 0.8 percent of the corporate book, 0.3 percent of the retail book, and 0.02 percent of the SME book was restructured.
"Retail disbursements touched all-time highs led by higher contribution from secured loan segments," Amitabh Chaudhry said. Advances including TLTRO investments grew 9 percent YoY for the bank. Its retail loans grew 9 percent YoY and accounted for 55 percent of the net advances of the Bank. The share of secured loans was 81 percent, with home loans comprising 36 percent of the retail book.
On the bank’s proposed deal with Max Life, Chaudhry said the structure of the deal was designed as per the comments received from RBI, and no further approval of the banking regulator would be needed now. He added that with the Competition Commission of India’s approval in place, the bank had submitted its application to the insurance regulator, whose approval is still pending.
(Edited by : Jomy)
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