Last updated: 26 Oct, 2021 | 02:23 pm
Axis Bank Results: Axis Bank Quarterly Results (Q2:2021) Date, Review & Earnings
Estimates beating profits: Axis Bank posted a 86% year-on-year (YoY) jump in net profit to post its highest quarterly profit of Rs 3,133 cr for the quarter ended September 2021. This can be attributed to recovering demand for goods and low interest rates leading to increase in loan book. Loan book grew 10% year-on-year to Rs 6.21 lakh cr. Also, the profitability increased due to lower NPAs.
NPAs: Gross NPA ratio fell to the lowest level in 20 quarters to 3.53% for the Q2 FY22. Gross NPAs stood at 3.85% in the Q1 FY22 and 4.28% in Q2 FY21. Net NPA ratio improved 12 basis points quarter-on-quarter to 1.08%.
Slippages: Slippages is when a standard asset becomes an NPA owing to the borrower not paying interest for more than 90 days. Gross slippages for the said quarter came in at Rs 5,464 crore, lower than Rs 6,518 cr in the June 2021 quarter but higher than Rs 1,751 cr (as per IRAC norms) in the same quarter last year.
Provisions: Specific loan loss provisions for Q2FY22 were Rs 927 cr compared to Rs 2,865 cr in Q1FY22. The bank has not utilised COVID provisions during the quarter. The bank holds cumulative provisions (standard + additional other than NPA) of Rs 12,951 cr at the end of Q2FY22.
Net interest income rises: A bank’s primary business is to borrow money and lend the same at a rate higher than the rate at which they borrowed. The income generated from this differential is known as net interest income. Net interest income (NII) for the bank rose 8% YoY to Rs 7,900 cr compared with Rs 7,326 cr in the year-ago quarter. Net interest margin (NIM) for the recently concluded quarter came in at 3.39%.
Restructured Loans: In the first round of restructuring, the bank had restructured Rs 2,124 crore in loans, with much of this coming from corporate loans. Of this, about Rs 46 crore has slipped into the NPA category.
Under the second round of Covid restructuring, Axis Bank restructured Rs 2,393 cr in loans which includes Rs 2,208 cr in personal loans.
Deposits: Deposits grew 18% year-on-year and 4% quarter-on-quarter. Retail term deposits grew 11% year-on-year and 3% quarter-on-quarter.
CASA: CASA capital is the cheapest source of capital for banks. The higher the number, the more profit a bank can earn. The ratio of current account and savings account deposits stood at 42%, up 201 basis points compared to a year ago.
Axis Bank Q2 results: review
Axis Bank has reported a healthy set of numbers in the Jul-Sep 21 period, aided by improvement in asset quality and lower provisions. The bank has also seen a healthy rise in its deposits and its advances. The bank remains well-capitalised with adequate liquidity buffers. Strong growth in the bank’s CASA deposits continue to drive loan growth. Net Interest Margin has also remained stable for Axis Bank. The bank’s asset quality has seen significant improvement, with GNPA ratio falling to the lowest in the last 20 quarters. The net slippages have declined by 82% as compared to the previous quarter.
Going forward, Axis Bank is well positioned to both a healthy growth in topline and bottomline given the upcoming festive season. The company’s subsidiaries have also posted robust performance in their respective segments.