Axis Bank reported a 36% rise in net profit for the ended September 30 to Rs 432 crore
The Reserve Bank of India (RBI) has found that Axis Bank under-reported its bad loans (non-performing assets) by Rs 4,867 crore from eight accounts during 2016-17, of which the bank is the lead in one and sole lender in another, where the bank may get back the entire amount of Rs 1,100 crore post a business sale transaction.
The report of the regulator was submitted in September and the bank has reclassified all eight accounts as NPAs and made additional provisions during the quarter ended September 30, 2017.
"The bank has duly recorded the impact of such reclassifications in the results for the quarter ended September 30, 2017," it said.
The bank said in a release, "RBI has pointed out certain reclassifications in the bank's asset classification and provisioning as on March 31, subsequent to the annual Risk Based Supervision (RBS) exercise conducted for fiscal 2017."
This is the second consecutive year when the bank was pulled up for under-reporting its NPAs. A similar exercise in 2015-16 threw up a divergence of Rs 9,478 crore.
Jairam Sridharan, chief financial officer (CFO), Axis Bank, said in a concall, "The RBI review was completed just a few days back and we have classified the accounts as NPA and provided for it. The Rs 4,867 crore NPA divergence came from eight accounts. We are lead only in one account and we are the sole banker in another account and we may be the first ones to be classified as NPAs."
Axis Bank reported a 36% rise in net profit for the ended September 30 to Rs 432 crore on higher growth in advances and trading profits, fee income and lower provisions over the previous year. However, the NPA provision jumped 60% over the previous quarter to Rs 3,340 crore.
Darpin Shah, an analyst with HDFC Securities, said, "The jump in slippages was mainly driven by RBI's divergence assessment and 73% of these were from BB or below poor. Consequently, the BB and below-rated portfolio were reduced from Rs 19,460 crore to Rs 15,820 crore."
The bank's gross NPA grew 5.90% to Rs 27,400 crore. Of this, Rs 5,000 crore is retail and SME and Rs 22,000 crore is corporate slippages. Gross NPA additions for the second quarter stood at Rs 8,936 crore, of which corporate slippages are at Rs 8,110 crore, the bank said in a release.
The share price was down 1.44% closing at Rs 513.20 on the BSE.
Net advances grew 16% over the previous year. The retail and SME loan book grew 23% and 15% over the previous year respectively. Corporate loan growth rebounded to 10% over the last year, led by working capital loans that grew 36% over the last year
The net interest income (NII) remained almost flat at Rs 4,540 crore as against Rs 4,514 crore in the second quarter of the last financial year. Net interest margin stood at 3.45%. Other income (comprising fee, trading profit and miscellaneous income) for the second quarter grew 2% over the previous year to Rs 2,586 crore.
Fee income for the second quarter grew 12% to Rs 2,170 crore. The key driver of fee income growth was retail banking, which grew strongly 23% over the previous year and constituted 48% of the bank's total fee income. Cards' fees grew 36% over the previous year. Transaction banking fees grew 13% and constituted 26% of the total fee income of the bank. Trading profits for the quarter stood at Rs 377 crore.
Q2 NET JUMPS 36%
- Axis Bank reported a 36% rise in net profit for the ended September 30 to Rs 432 crore
- The rise was on account of higher growth in advances and trading profits
- However, the NPA provision jumped 60% over the previous quarter to Rs 3,340 crore
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This is the second consecutive year when the bank was pulled up for under-reporting its NPAs. A similar exercise in 2015-16 threw up a divergence of Rs 9,478 crore.
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