Axis Bank Q2 result update!
Last updated: 28 Oct, 2020 | 01:56 pm
- Profit beats estimates: Net profit stood at ₹1,683 crore in Q2FY21 as against a loss of ₹112 crore in the same quarter a year ago, beating street expectations. Analysts had earlier anticipated a profit of about ₹1,476 crore.
- Strong operating performance: Net Interest Income in Q2FY21 grew 20% yearly to ₹7,326 crore. Net Interest Margin remained flat at 3.58% in Q2FY21 while fee income grew 67% sequentially and 4% on a yearly basis. Operating profit for Q2FY21 grew by 16% YOY to ₹6,898 crores. Market share in UPI (20%) and Mobile banking (18%) was up 8% each on a yearly basis.
- Improving performance across business segments: Retail loans grew 12% yearly to ₹3,05,685 crore out of which 80% are secured and 36% are home loans. SME loan book grew 6% sequentially to ₹60,573 crores but was down 1% on a yearly basis. 90% of the SME book is secured with predominantly working capital financing, and is well diversified across geographies and sectors. Corporate loan book including TLTRO investments grew 22% yearly. The chart below shows Axis Bank's revenue from various segments.
- Asset Quality: As on 30th September 2020, the Bank’s Gross NPA and Net NPA levels were 4.18% and 0.98% respectively as against 4.72% and 1.23% as on 30th June 2020. The Bank has made incremental provisions of ₹1,279 crore towards loans under moratorium and ₹1,864 crore towards probable restructuring, aggregating to ₹3,143 crores. As at 30th September 2020, the Bank holds in aggregate additional provisions of ₹10,839 crore.
- Update on moratorium: The RBI had permitted banks to offer a moratorium to borrowers until the end of August to help them mitigate the impact of the pandemic. Following this, the Reserve Bank of India in September permitted one-time restructuring of advances of companies and retail borrowers hit by the Covid-19 pandemic. While these assets don’t have to be marked as NPAs, banks have been asked to disclose details of the restructured assets. The GNPA ratio as per said IRAC norms at September 30, 2020, would have been 4.28% and Net NPA ratio would have been 1.03%. This reflects a decline of 75 bps and 96 bps respectively on a yearly basis and 44bps and 20bps decline on a sequential basis.
Axis Bank has delivered a decent set of numbers for the quarter ended September 30. Asset quality has remained stable, and as the economy recovers, concerns around the retail book (56% share in total revenue) are fading away. Though asset quality might still deteriorate in the coming quarters, the third-largest private sector bank of India has a strong capital and liquidity position to tackle the same. The bank has continued its focus on digital banking and has delivered strong results on this front, further strong deposit growth is expected to drive future loan growth.