After the massive clean-up of books last year that led to a substantial loss, Axis Bank’s March quarter results, as expected, are optically pleasing. Added to this, a substantial reduction in the bank’s stressed book and steady improvement in core performance may offer a much-needed respite to investors.

After reporting a loss of ₹2,189 crore in the March quarter last year, the bank has registered a profit of ₹1,505 crore in the March quarter of FY19. Importantly, after reporting steep bad loan divergences in the previous two fiscals, the bank has not reported any divergence pertaining to the FY18 fiscal, which is comforting.

Axis Bank had reported a steep ₹16,536 crore of slippages in the March quarter last year, owing to accelerated NPA recognition in its low-rated loan book and one-time impact on account of the RBI’s February 2018 circular.

While this had led to a huge loss, the substantial reduction in the bank’s stressed assets pool, had led many to believe that the bad loan issue had bottomed out for the bank. Four quarters hence, the steady improvement in asset quality has certainly played out in favour of hopeful investors.

The bank’s gross slippages fell to ₹4,337 crore in the June quarter and further to ₹3,012 crore in the latest March quarter.

The bank’s BB and below-rated book has also shrunk substantially over the last two years – from ₹27,411 crore in the June 2016 quarter to ₹7,467 crore in the March 2019 quarter.

On the core business front, pick-up in the bank’s net interest income growth in recent quarters has been heartening. In the latest March quarter, the bank’s net interest income grew by 21 per cent.

While the bank’s growth in corporate loans remained muted at 5 per cent Y-o-Y (as of March 2019), retail loans grew at a healthy 19 per cent, driving the overall loan growth.

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