Axis Bank's profit & loss statement is likely to witness more risks going forward, said Krishnan ASV of SBICAP Securities, after the lender on Tuesday reported a surprising loss of Rs 1,388 crore for the quarter ending March 31, as provisions rose sharply compared to a year ago.
The bank said that the retail part of the business was practically shut and that no one is borrowing. It has set aside a sum of Rs 3,000 crore for any potential impact because of the COVID-19 pandemic.
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Axis Bank mentioned that 10-11 percent of customers asked for moratorium and it formed 28 percent in value of the total loan book.
“From a moratorium perspective, Axis Bank claimed that nearly one-fourth of their book has availed moratorium. It seems that two-third of that exposure has availed moratorium despite having the means to pay. So that means one-third has availed moratorium because they did not have the means to pay. If we do the math there, it is almost around 1.7-1.8 trillion worth of loans that have availed moratorium on which you have made about Rs 3,000 crore of provisions. So provisioning although prudent, I believe it may be insufficient. So there are more hits to come on the profit and loss (P&L)," said Krishnan ASV.