Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: 4.0
Article rating: 5.0
Article rating: 3.3
Article rating: 5.0
Article rating: 4.0
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.3
Article rating: 1.0
Article rating: No rating
RSS

News

Axis Bank suffers loss of Rs 2,189 cr in March quarter

Author: PTI/Friday, April 27, 2018/Categories: Banking & Financial Services

Axis Bank suffers loss of Rs 2,189 cr in March quarter

Mumbai - Axis Bank today reported a maiden quarterly loss of Rs 2,189 crore for the three months to March on an over Rs 16,000-crore addition to the bad loan pile, driven majorly by regulatory changes in impaired assets recognition and hinted at more pain in the offing.

For the same quarter of FY17, the third largest private sector lender had booked a profit of Rs 1,225 crore, while for the preceding December 2017 quarter, its profit stood at Rs 726 crore.

The massive loss in the fourth quarter pulled down its full year earnings to a low Rs 275 crore, against Rs 3,679 crore, the bank said, adding the higher bad loans resulted in a threefold spike in provisioning to Rs 7,179 crore, and losses would have been much higher had it not been for a tax write-back to the tune of over Rs 1,300 crore.

Outgoing managing director and chief executive Shikha Sharma, who was reportedly forced to cut short her fourth three-year term on RBI's unhappiness on ballooning non-performing assets under her leadership, conceded the bank's bets on infrastructure have gone awry.

"We made some significant bets on the infrastructure sector, which have turned out poorly in this credit cycle," Sharma told reporters in a rare appearance in a post-results press interaction.

Sharma, who will end her nine-year tenure with the bank in December, said she is "disappointed" with the performance of the bank on credit risk.

Led by reverses in the power sector and a significant jump because of the February 12 RBI circular overhauling the new NPA resolutions and recognition, the bank saw slippages to the tune of Rs 16,536 crore for the reporting quarter, including a Rs 13,938-crore bulge from the corporate segment.

While the bank refused to disclose the exact impact of the new NPA recognition rules on its books, which ended restructuring of every kind on NPA except through bankruptcy resolution, Sharma termed the new framework as an "important milestone" that will enhance the credit culture.

Guiding towards more bad news, Sharma said the worst is not over yet. "Accelerated NPA recognition takes care of much of the possible stress and it will only be in the second half of fiscal 2019 that the credit cost or provisioning will normalise."

It has been a difficult sailing for the bank since RBI started the asset quality review late 2015, after which it has been consistently reporting reverses every quarter as the regulatory oversight on the asset qaulity tightened. The bank was also found to have repeatedly under-reported bad loans with divergences of over Rs 10,000 crore for the past two fiscal years.

However, in the midst of the NPA pain, it successfully raised over Rs 10,000 crore in core capital from existing investors led by Bain Capital and LIC.

On a positive side, the watchlist created after the asset quality review, came down to Rs 428 crore at the end of March and the book has been closed to be integrated with the overall one, chief financial officer Jairam Sridharan said.

Gross non-performing assets ratio increased to 6.77% of its total loan book, which rose 18% for the quarter.

Sharma said the bank has strengths like a strong core capital based and an appetite for growth, and laid out a strategy for FY19 that focuses on normalising credit risks and delivering profitable growth.

Sridharan said the current capital buffer is suffice for at least two years, assuming a 20% loan growth every year.

For the reporting quarter, net interest income was flat at Rs 4,730 crore as a large part of assets did not pay interest, other income was down 7% at Rs 2,789 crore given the bloodbath in the bond market, but net interest margin was stable at 3.44%.

The resilient retail segment now accounts for 46% of the assets of the bank from 20% nine years ago when she took over, Sharma said.

She also spoke about other strides like a successful integration of the acquired Enam Securities and initiatives on the digital and analytics side.

"Lots of things have gone well. When I look back over the last nine years, I've enjoyed being here and have been very proud of some of the stuff that we have done," she said.

In anticipation of results announcement post-market hours, the bank counter slipped 0.77% to close at Rs 494.55 on the BSE as against a 0.62% gains on the benchmark.

Print Rate this article:
No rating

Number of views (151)/Comments (0)

rajyashree guha

PTI

Other posts by PTI
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free