Axis Bank net profit zooms 54% as net interest income rises and bad loans shrink

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Private sector lender Axis Bank on Thursday reported a 54 percent year-on-year (YoY) jump in net profit at Rs 4,117.8 crore for the fourth quarter ended March 31, 2022.

In the corresponding quarter last year, the company posted a net profit of Rs 2,677.1 crore. CNBC-TV18 Polls had predicted a profit of Rs 3,879.8 crore for the quarter under review.

The bank's operating profit for the quarter grew 13 percent YoY and 5 percent QoQ to Rs 6,466 crore. The bank's net interest income (NII) grew 17 percent YoY and 2 percent QoQ to Rs 8,819 crore. The net interest margin (NIM) for Q4FY22 stood at 3.49 percent.

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Under Basel III, the Capital Adequacy Ratio (CAR) and CET1 ratio as of March 31, 2022, were 18.54 percent and 15.24 percent respectively. Additionally, the bank held Rs 5,012 crore of COVID provisions, not considered for CAR calculation providing a cushion of 60 bps over the reported CAR. The book value per equity share increased from Rs 332 as of March 31, 2021, to Rs 375 as of March 31, 2022.

The corporate & commercial banking fees together grew 7 percent YoY and 10 percent QoQ. The trading profits and miscellaneous income for the quarter stood at Rs 231 crore and Rs 234 crore respectively. Overall, non-interest income (comprising of fee, trading profit and miscellaneous income) for Q4FY22 stood at Rs 4,223 crore, up 19 percent YOY and 10 percent QOQ.

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As of March 31, 2022, the bank's reported gross NPA and net NPA levels were 2.82 percent and 0.73 percent respectively as against 3.17 percent and 0.91 percent as of December 31, 2021. Gross slippages during the quarter were Rs 3,981 crore, compared to Rs 4,147 crore in Q3FY22 and Rs 5,285 crore in Q4FY21 (as per IRAC norms).

Recoveries and upgrades from NPAs during the quarter were Rs 3,763 crore. Consequently, the net slippages in NPAs (before write-offs) for the quarter of Rs 218 crore as compared to Rs 860 crore in Q3FY22 and Rs 1,822 crore in Q4FY21. The net slippages in retail were Rs 193 crore, commercial banking was Rs 85 crore and wholesale banking were negative Rs 60 crore.

In addition to recoveries and upgrades previously mentioned, recoveries from written-off accounts were Rs 719 crore. Hence on aggregate, the slippages were lower than recoveries, upgrades, and collections from written-off accounts. The bank in the quarter wrote off NPAs aggregating Rs 1,696 crore.

Also Read: ICICI Securities Q4 results: PAT up 3% YoY to Rs 340 crore, revenue rises 21 to Rs 892 crore

As of March  31, 2022, the bank's provision coverage, as a proportion of gross NPAs stood at 75 percent, as compared to 72 percent as of March 31, 2021, and 72 percent as of December 31, 2021.

The fund-based outstanding of standard restructured loans implemented under the resolution framework for COVID-19 related stress (Covid 1.0 and Covid 2.0) declined during the quarter and as of March 31, 2022, stood at Rs 4,029 crore that translates to 0.52 percent of the gross customer assets. The bank carries a provision of 24 percent on restructured loans, which is in excess of regulatory limits.

Specific loan loss provisions for Q4FY22 were Rs 602 crore compared to Rs 790 crore in Q3FY22. The bank has not utilized Covid provisions during the quarter. The Bank holds cumulative provisions (standard + additional other than NPA) of Rs 12,428 crore at the end of Q4FY22.

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"It is pertinent to note that this is over and above the NPA provisioning included in our PCR calculations. These cumulative provisions translate to a standard asset coverage of 1.77 percent as of March 31, 2022. On an aggregated basis, our provision coverage ratio (including specific + standard + additional + Covid provisions) stands at 132 percent of GNPA as of March 31, 2022," the bank said in a regulatory filing.

Credit cost for the quarter ended March 31, 2022, stood at 0.32 percent, declining by 116 bps YoY and 12 bps QoQ.

The Board of Directors has recommended a dividend of Re 1 per equity share of the face value of Rs 2 per equity share for the year ended March 31, 2022. The results came after the close of the market hours. Shares of Axis Bank ended at Rs 779.95, up by Rs 18.35, or 1.81 percent on the BSE.

Talking about numbers, in an interview with CNBC-TV18, Krishnan ASV, lead analyst-banking, financial services and insurance at HDFC Securities said, “We have a buy recommendation and that stays, but from a pecking order perspective, that is still number two-three. We have ICICI Bank, State Bank of India and probably number three would be Axis.”