Rs 2,137 Crore Tax Write-Down Has Axis Bank in the Red

Mumbai: Axis Bank on Tuesday reported a Rs 18.14-crore next loss at a consolidated level for the three months to September period, driven down by a Rs 2,137-crore deferred tax write down.

Excluding this massive tax write-down, the bank's standalone net has jumped 157 percent to Rs 2,026 crore. Instead the third largest private sector lender booked a net loss of Rs 112 crore against a net income of Rs 789.61 crore in the corresponding quarter previous fiscal.

The lender's core net interest income grew 17 percent to Rs 6,102 crore, boosted by a 19 percent loan growth and a widening of the key net interest margin to 3.51 percent.

Another boost came in from other income which jumped to Rs 3,895 crore from Rs 2,678 crore, the bank said, adding the core fee income also clipped at 11 percent on a healthy growth in retail fees.

On the asset quality front, which has been a painful area for the bank for the past many quarters, the gross non-performing assets ratio improved to 5.03 from 5.96.

Fresh slippages came in at Rs 4,983 crore, largely due to more than Rs 2,800 crore of corporate advances slipping into NPAs, chief executive and managing director Amitabh Chaudhry told reporters.

Chief financial officer Jairam Sridharan said as much as 97 percent of the fresh corporate slippages are from a list of non-investment grade accounts, which are largely legacy in nature, and that the same has come down 16 percent to Rs 6,291 crore from Rs 7,467 crore.

Some of the troubled shadow banks are a part of this list, the bank management said.

Chaudhry said slippages from "BB and below" rated borrowers are very high and also pointed out that it has built a floating provision of Rs 2,600 crore to take care of such accounts as it expects the pain to continue.

However, Chaudhry tried to project a positive picture on the outlook saying all will be good going forward.

On the dichotomy between the two, he said, "it is not two different things. The reason I am saying so is that most of these issues are already known. But, at the same time there is a fresh stock of bad assets, and we have to ensure that the stock either moves out or goes down. We also need to ensure that the ageing of that stock has to be managed over time."

He said the bank, which had a massive Rs 12,500 crore fund infusion recently, has enough capital but "the economic environment is going down rather than up".

Significantly, the bank saw a whopping Rs 1,355 crore of retail loans slipping into dud which are assets spread across the segments, including credit cards, agriculture loans and other segments, Sridharan said, adding there is also some stress in the commercial vehicles space.

The small and medium enterprises segment also is also highly stressed with Rs 766 crore of bad loans. Chaudhry said the bank is cautious on growing the SME book, where the loan growth has slowed down to a paltry 2 percent now largely because they are not getting paid on time by their customers who are large corporates.

Executive director looking after corporate lending Rajiv Anand said the environment is challenging now and the bank has been very cautious on the large loans front.

Retail head Pralay Mondal said there is a large opportunity on retail driven by technological inputs, and pointed to its growth in auto loans where the rest of the industry is struggling amidst falling demand.

Chaudhry, however, exuded confidence that the bank is in a strong position to grow from here on strong capital, a new management team and also most of the slippages-related issues behind.

The Axis Ban counter gained 0.49 percent at Rs 712.70 on the BSE as against a 0.85 percent correction in the benchmark taking a breather after a six-day rally.