New Delhi: Axis Bank's first quarter (April-June) earnings disappointed the street on all counts with the profit falling 21.4 percent to Rs 1,555.5 crore on yearly basis, impacted by sharp surge in provisions. However, it was supported by other income and operating profit. According to 27 Bloomberg analysts, the bank was expected to post a net profit of Rs.2,010.70 crore.
Net interest income (NII), or the core income a bank earns by giving loans, increased 11.36% to Rs.4,516.92 crore in the June quarter from Rs.4,056.17 crore last year. Other income increased 19.15% to Rs.2,738.28 crore from Rs.2,298.27 crore in the same period last year. In December, Reserve Bank of India (RBI) conducted an asset quality review across the banking sector, following which the banks were asked to recognize visibly stressed assets as non-performing assets (NPAs). RBI also asked banks to make adequate provisions for the stressed assets. This has hit the profitability of some banks.
Gross NPAs at Axis Bank rose 56.93% to Rs.9,553.17 crore at the end of the June quarter from Rs.6,087.51 crore in the March quarter. On a year-on-year basis, gross NPAs jumped 124.72% from Rs.4,251.18 crore. As a percentage of total loans, gross NPAs stood at 2.54% at the end of the June quarter as compared to 1.67% in the previous quarter and 1.38% in the year-ago quarter.
Provisions and contingencies jumped 81.21% to Rs.2,117.17 crore in the quarter from Rs.1,168.33 crore a quarter ago. On a year-on-year basis, they jumped 88.73% from Rs.1,121.77 crore. Net NPAs were at 1.08% in the June quarter compared to 0.7% in the previous quarter and 0.48% in the same quarter last year.
On Friday, shares of Axis Bank fell 0.13% to Rs.537.55 on BSE, while India’s benchmark Sensex rose 0.33% to close at 27,803.24 points. The company declared results after market hours.