Private lender Axis Bank has turned to profitability in the first quarter of the current fiscal year after suffering its first-ever quarterly loss in the fourth quarter of the previous fiscal year. For the April to June (Q1 of the fiscal year 2018-19) period, Axis Bank reported a net profit of Rs.701 crore, which is 46.3% lower than the net profit of Rs.1,305.60 crore reported for the same period a year ago.
Though the net profit has declined significantly, it has exceeded the estimates put forth by various analysts. Analysts from Bloomberg estimated a net profit of Rs.624 crore and analysts from Thomson Reuters estimated a net profit of Rs.556 crore. Since Axis Bank is bouncing back from a quarterly loss, its higher-than-estimated net profit is considered to be a positive indicator.
Net interest income for the first quarter stood at Rs.5,167 crore compared to Rs.4,616 crore in the previous year. Analysts’ expectations of the company’s net interest income for the first quarter stood at Rs.4,810 crore. Loans for the period increased 14% from the previous year owing to the performance of various retail and small-and-medium enterprise divisions. Deposit growth for the first quarter stood at 13.5% compared to a year ago.
Non-performing assets (NPAs) are considered to be one of the major reasons for the bank’s underwhelming performance in the previous quarter. Gross NPAs as a percentage of total advances for the first quarter stood at 6.52% compared to 6.77% in the previous quarter (ended March 2018).
Provisions for bad loans increased to Rs.3,338 crore from Rs.2,342 crore in the same period of the previous year. In the previous quarter ended March 2018, provisions for bad loans stood at Rs.7,149.5 crore. Stabilisation of asset quality is considered to be one of the main reasons why the performance of Axis Bank bounced back from a quarterly loss.
Source: Bloomberg Quint