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Axis Bank Q3 profit rises by 14.5 percent

Axis Bank Ltd, India’s third-biggest private sector lender by assets, reported a surge in bad loans in the December quarter, as the Reserve Bank of India (RBI) asked lenders to reclassify some troubled loan accounts as bad loans.

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The bank’s gross non performing assets (NPAs) and net NPA levels were 1.68 per cent and 0.75 per cent respectively, as against 1.38 per cent and 0.48 per cent respectively as on September 30, 2015. “We had built up the contingency pool from the profit and loss account over the last few quarters and we have used Rs 220 crore from the pool”.

Axis Bank has taken into account the full impact of the reclassification based on the RBI’s review during the third quarter itself. Absolute gross non-performing assets (NPAs) were at Rs.5,724 crore at the end of the December quarter compared with Rs.4,451 crore in the previous quarter. This is one of the lowest quarterly profit growth figures for the bank in over 10 years.

For the October-December quarter, the bank reported a net profit of Rs2,175.3 crore compared with Rs1,899.76 crore in the year-ago quarter.

Total income of the bank rose to Rs 12,531 crore, from Rs10,929 crore in the year-ago period. The recast pipeline under 5/25 scheme is Rs 2,500 crore.

The bank seems to be very cautious on the narrative of a resurgence in the economy from a short term perspective. At an operating level for different firms, we are not seeing any pick-up in demand, or in revenue and new investments. Reliance Securities maintained a neutral call on the stock even though the numbers were in line with its estimates.

To protect the quality of its book, the lender is giving loans to better rated corporates which compresses the spread, he said.

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The lender has seen healthy credit growth of 21 per cent, year on year, mainly aided by 27 per cent growth in retail loans.

On Wednesday Axis Bank reported a net profit of Rs.2,175.3 crore compared with Rs.1,899.76 crore in the same period last year