Axis Bank business update!

Axis Bank business update!

Last updated: 21 Dec, 2020 | 08:51 am

Axis Bank business update!

Update on Asset Quality

  • Axis Bank has said that its asset quality situation is much better than what was feared initially, and the bank has made adequate provisions going forward. Axis Bank’s asset quality has shown improvement in Jul-Sep 20 period, with Gross NPA at 4.18% (4.72% in June-20) and Net NPA at 0.98% (1.23% in June-20).
  • Axis Bank has cautioned that retail non-performing assets will be higher in the third and fourth quarter of FY21 and will go back to the pre-Covid levels only in the FY22
  • These numbers will be affected due to the restructuring of loans in the current quarter. While the bank has said that it is seeing few applications for restructuring, the exact picture will be known only after the window closes on Dec 31.
  • The bank said that it is following a cautious approach in its lending. It has been focusing largely on the secured assets front when it comes to new loans and the business has gone back to pre-Covid levels, while the riskier unsecured loans side of the business has reached around 70% of the pre-Covid levels

Update on Provisions

  • The bank has provisioned for an excess ₹12,540 crore, and also raised ₹10,000 crore of fresh capital to take the overall adequacy to over 19% with a view to position the bank for growth opportunities

INDmoney Analysis

Right now, the asset quality is cushioned due to the moratorium and the subsequent one-time restructuring of loans. Small businesses continue to remain under stress. Hence, the true picture of NPAs will be known only after the end of this quarter.  Even though the current economic environment is extremely stressful for the banking Industry, Axis Bank has the necessary firepower to tide over these turbulent times.