The country's third largest private sector lender Axis Bank on Wednesday reported a 29 per cent decline in December quarter consolidated net at Rs 1,334 crore, and reported a spike in non-performing assets from the retail assets side.
In the 2019 December quarter, consolidated net profit was at Rs 1,884 crore.
On a standalone basis, the city-based bank's net profit for the October-December period declined 36 per cent to Rs 1,116 crore from Rs 1,757 crore in the same period a year ago.
It reported fresh slippages of Rs 6,736 crore under the IRAC norms as against Rs 6,214 crore in the year-ago period. The same had come down to Rs 1,572 crore in the preceding September quarter.
A bulk 83 per cent of the fresh slippages came from retail assets, which had become a focus area for lenders across the system in the last few years because of its perceived resilience in face of stress being reported by the corporate segment.
The bank's Chief Financial Officer Puneet Sharma said the retail slippages came from unsecured loans, self-employed segment and mortgages as well.
On the mortgages front, he said non-availability of legal recourses during the pandemic period has curtailed recovery options but exuded confidence that the bank will be able to recover high amounts as its loans to value ratio is under 60 per cent.
The bank management hinted some changes have been effected on the retail lending front because of the reverses and the segment continues to be an important focus area. Retail loan growth went down to only 9 per cent.
Axis Bank's Chief Executive and Managing Director Amitabh Chaudhry said it has decided to be as prudent as required in recognising stress upfront and providing for the same upfront, despite a Supreme Court order restraining banks from recognising sour assets as NPAs after the end of the loan moratorium in August.
The overall provisions rose 32 per cent to Rs 4,604 crore, which include Rs 3,899 crore for assets overdue for over 90 days. Chaudhry said the bank has not drawn down on any COVID-related provisions made earlier. Cumulative provisions held by it stand at Rs 11,856 crore as of December.
Sharma said there was a Rs 1,050 crore-impact on the profit figure because of the provisioning done during the reporting quarter.
The slippages position will be better in the March quarter than the one in December, he said, adding that FY22 will be a "look forward" year for the bank.
Its gross non-performing assets ratio came at 3.44 per cent as against 5 per cent in the year-ago period. If not for the Supreme Court order, the same would be 4.55 per cent in December.
The bank restructured over Rs 2,700 crore of assets during the December quarter, with a bulk of it coming from the low-rated assets book. The 'BB and below book' on a funded basis came down to Rs 8,722 crore as against Rs 9,118 crore in the year-ago period and Sharma said the improvement is not on account of the Supreme Court standstill order.
The bank's core net interest income grew 14 per cent to Rs 7,373 crore during the December quarter on account of a 9 per cent expansion in loan book and the net interest margin being stable at 3.59 per cent.
Chaudhry said the bank is not recognising the gains on both interest income front from the standstill assets which are overdue for over 90 days but not reported as NPAs due to the Supreme Court order. The other income came at Rs 4,153 crore as against 4,010 crore in the quarter-ago period.
Its overall capital adequacy stood at 18.68 per cent as of December 2020 and Chaudhry said it is well poised to take advantage of the opportunities which will come up in anothertwo quarters after the recovery.
Among the subsidiaries, the domestic units reported a 72 per cent improvement in profit after tax at Rs 541 crore and the nine-month profit has already exceeded the ones reported in FY20.
Axis Bank shares closed 4.05 per cent down at Rs 631.90 apiece on the BSE as against 1.94 per cent correction in the benchmark.
