Mumbai, Jul 17 (PTI) Axis Bank on Thursday reported a 3 per cent dip in its June quarter consolidated net profit at Rs 6,243.72 crore, impacted by the implementation of changes in non-performing assets and loan upgrade policy.
On a standalone basis, the third largest private sector lender's net profit declined to Rs 5,806 crore from the year-ago period's Rs 6,034 crore, but was down sharply when compared with the quarter ago period's Rs 7,117 crore.
The bank's core income showed low growth in the reporting period, but it was a Rs 614 crore hit brought about by what it called it a "technical impact" which hurt the profits.
The bank's managing director and chief executive Amitabh Chaudhry told reporters that it decided to adopt more prudent way of asset recognition, upgrades and treatment of accounts which have seen one-time settlements, as it had announced in the previous quarter, and added that economic losses due to the change will be "minimum" going ahead.
Chief financial officer Puneet Sharma explained that as part of an annual exercise, it found out that a peer bank is more prudent in its asset recognition and Axis Bank also decided to adopt the same norms.
The bank was always following the regulator-prescribed policies, he said, stressing that the change in norms is not driven by any changes it sees to the economic environment.
The bank's core net interest income inched up 1 per cent to Rs 13,560 crore on the back of a sharp decline in net interest margin to 3.80 per cent from the year-ago period's 4.05 per cent, and a loan growth of 8 per cent, which is trailing the banking system's.
Chaudhry said that the bank has the "right platform" to outpace the system growth in FY26, hinting of a faster-clipped expansion in the remaining quarters.
In Q1, retail credit grew by just 6 per cent, rural by 5 per cent, corporate loans by 9 per cent and ones to small businesses by 16 per cent.
The gross non-performing assets ratio increased to 1.57 per cent from 1.28 per cent in the quarter-ago period, largely because of the technical impact.
The gross slippages came at Rs 8,200 crore as against Rs 4,805 crore in the preceding quarter, the bank said, adding that adjusting for the technical impact, the gross slippages stood at Rs 5,491 crore.
Sharma said the technical impact has been seen the highest in cash credit and overdraft-based loan facilities, and hence a bulk of the elevated stress is in the retail segment.
Of the Rs 5,400 crore of retail slippages excluding the technical impact, a fourth came from the agricultural sector due to seasonal impact while the remaining three-fourths is from unsecured loans like personal loans, credit cards and microfinance.
Sharma said the bank sees no issues with the retail secured assets, while a senior official said it is witnessing some improvements on the unsecured side but it will only be able to reach a conclusive view on it by the end of the second quarter.
Its overall provisions nearly doubled to Rs 3,948 crore from Rs 2,039 crore in the year-ago period, and were way higher than the Rs 1,359 crore in the quarter-ago period, as a result of the technical impact.
The bank's overall capital adequacy stood at 16.85 per cent as against 17.07 per cent in the quarter-ago period.
With its deputy managing director Rajiv Anand set to retire in August, efforts are on to find a third executive director by the end of his term, Chaudhry said.
The bank's domestic subsidiaries' post-tax net profit during the quarter increased 4 per cent to Rs 451 crore, which included a 23 per cent growth in Axis Finance's net at Rs 189 crore and asset management arm's net growing 12 per cent to Rs 130 crore.
Axis Bank scrip closed 0.68 per cent down at Rs 1,159.85 apiece on the BSE on Thursday, as against a 0.45 per cent correction on the benchmark.