PTI
Mumbai
Axis Bank on Friday reported a steep 21 per cent decline in net profit at Rs 1,555.5 crore for the three months to June, roiled by a more than doubling of its bad loan provisions, higher operating expenses (opex) towards branch expansion and the resultant salary outgo.
“Decline in profit is driven by slippages from the watch list, which lead to a rise in both gross NPA as well as net NPA levels to 2.54 per cent and 1.08 per cent, respectively, in the reporting quarter.
“Another reason for the dip in profit is the higher salary outgo and investment into branches which led to a 23 per cent increase in operating expenses,” Deputy Managing Director V Srinivasan told reporters on a post-earnings concall late Friday evening.
He said the lower profit is due to tepid other income or fee income, which grew only 11 per cent in the first quarter ended June 30, to Rs 2,738 crore from Rs 2,298 crore a year ago.
On the rise in operating expenses, he said while the bank did not open a single branch in the first quarter of last fiscal, it has opened 102 branches in the reporting quarter, which has taken its headcount to 52,400 from 43,300 a year ago. From January this year, the private lender has opened 201 branches against 31 during the same period last year.
“But still we maintained our cost to income ratio at 38 per cent,” Srinivasan said.
Gross NPA in absolute term more than doubled to Rs 9,553 crore from Rs 4,251 crore as of end June. Of this, NPA provisions stood at Rs 1,823 crore as against Rs 1,046 crore a year ago and Rs 906 crore in the March quarter of last fiscal.
Chief Financial Officer Jairam Shirdharan said all the provisions, including an additional Rs 115 crore towards AQR accounts identified by RBI last December, have been met through the balance-sheet only and that nothing has been from the Rs 3,000 crore contingency buffer created in the March quarter.
In the March quarter, it can be noted that, the Shikha Sharma-led bank had tagged a whopping Rs 22,000 crore worth accounts into a special watch list and had warned that 60 per cent of this might slip into NPAs over the next eight quarters including the June quarter. And this does not include the AQR accounts. Of this total watchlist, 53 per cent accounts are from iron and steel and textile accounts.
Asked whether the bank expects any negative surprises in the second quarter from the watchlist, Srinivasan said, “No. We are also not revising our NPA outlook for the September quarter.”
