Axis Bank, the third largest private lender, reported a loss of Rs 2,188.7 crore in the fourth quarter ending March 31 2018, its first quarterly loss since its listing in 1998 on the back of a sharp rise in non-performing assets of Rs 34,248 crore.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

Shikha Sharma, managing director and chief executive officer (CEO), Axis Bank, said credit risk was a problem area. In an interaction with the reporters Sharma said, "Credit risk area was a disappointment for the bank. Infra play did not work out well, and now it is critical that we complete the NPA recognition cycle."

"The bank was nearing an end to the recognition process of bad loans," she added on the bank's poor performance.

The corporate loan exposure to the infrastructure sector ate into the profits of the bank, thereby forcing the lender to shift focus from term loans to working capital loans. The bank is seeing growth in its corporate book coming in from the shorter and less risky working capital loans. It is also looking for a new chief after Shikha Sharma retires on December 2018 following the Reserve Bank of India's (RBI) instruction asking the bank's Board to cut short her fourth term. The RBI's move, according to insiders, was due to meagre disclosures two years back that led to under reporting of NPAs.

During the quarter under review, the bank reported a fresh slippage of Rs 16,536 crore, majority of which came from the corporate book. The watch list of the bank was reduced by 92% to Rs 498 crore.

Jairam Sridhar, Chief financial officer, Axis bank said in a concall "About 90% of the fresh slippages are from BB and below rated companies. We have taken all the stressed assets which also include the accounts in various restructuring scheme. There are no restructured assets on our books. We have dissected the entire book and taken out the stressed loans. About 60% of the NPAs are from the infrastructure and steel accounts." Provisions for bad loans jumped to Rs 7,179.53 crore compared to Rs 2,811 crore in the previous quarter.

"This includes an accelerated recognition in the stressed loan book of the bank, particularly in the power sector," Axis Bank said in a media statement. "It also includes a onetime impact driven by recent regulatory guidelines on resolution of stressed assets," the statement added.

The total income of the bank during the quarter was at Rs 14,500 crore, higher than the Rs 14,181 crore it earned in the financial year 2016-17. For the full year 2017-18, the bank's net profit fell by 92.5% to Rs 275 crore as against a profit of Rs 3,678 crore a year ago. The net interest income (NII) for the financial year 2017-18 rose 3% to Rs 18,618 crore and the net interest margin of the bank stood at 3.44%.

The bank's advances grew 18% over the previous year to Rs 4,39,650 crore, of which retail loans grew 23% to Rs 2,06,465 crore accounting for 47% of the net advances of the bank. The SME loans grew 19% to Rs 58,740 crore accounting for 13% of the net advances, while the corporate credit led by working capital loans grew 12% to Rs 17,446 crore.

...& ANALYSIS

  • Corporate loan exposure to the infrastructure sector ate into the profits of the bank  
  • Bank reported a fresh slippage of Rs 16,536 crore in the fourth quarter