Indicating that private banks are not immune to the menace of bad loans, Axis Bank, India’s third largest private bank, has posted a 1.20 per cent decline in net profit at Rs 2,154.28 crore in the quarter ended March 2016 as against a profit of Rs 2180.59 in the same period of last year in the wake of a rise in provisioning and non-performing assets.
Gross NPAs of the bank surged by 48 per cent to Rs 6,087.51 crore (1.67 per cent of advances) in the latest quarter from Rs 4,110.19 crore (1.3 per cent) a year ago.
NPAs of Rs 1,474 crore were added during the latest quarter as against the Rs 2,082 crore in Q3, when it recognised maximum stress owing to the RBI mandated asset quality review. While recoveries and upgrades were Rs 780 crore, the write-offs amounted to Rs 330 crore.
In order to tackle future stress, the bank set aside Rs 300 crore into a countercyclical buffer taking the overall contingency assets provisions to Rs 480 crore, which had been used up in the last two quarters.
Further, the bank sold Rs 349 crore of NPA outstanding to an asset reconstruction company for a consideration of Rs 110 crore of which cash consideration stood at Rs 25 crore and the balance consideration was received as security receipts. According to the bank, the value of restructured assets amounted to Rs 8,072 crore as against Rs 7,745 crore previously.
Provisions were Rs 1,168 crore as against Rs 709 crore last year. “Our asset quality was stable compared to the preceding quarter, but we have an outlook of elevated stress. The threats remain elevated,” a bank official said. Axis Bank shares rose by 2.22 per cent to Rs 480.45 on the BSE. The bank’s net interest income rose 19.8 per cent to Rs 4552.6 crore. Its net interest margins went up from 3.79 per cent in Q3 to 3.97 per cent in Q4.