Axis Bank swings to black in Q4, warns of 2nd wave impacting biz across segments

Axis Bank on Tuesday posted a consolidated net profit of Rs 2,960.4 crore for the March quarter, as against a loss of Rs 1,250 crore in the year-ago period, and warned of an immediate business impact because of the second wave of COVID across segments.

The third largest private sector bank, whose standalone net profit came at Rs 2,677 crore for the reporting quarter, however, said that there has not been any impact from a collections perspective as yet but there may be one in the near term as the lockdowns make it difficult.

Its chief executive and managing director Amitabh Chaudhry told reporters that corporates have gone into a wait and watch mode after the second wave and stressed that the bank's strategy will be a mix of being bold and conservative.

"These are early days, but we do see an immediate business impact across segments," Chaudhry said.

He, however, made it clear that the bank will not chase loan growth which does not come at a price it is comfortable at, and pointed out that even in the March quarter, it chose to miss out on some wholesale lending opportunities because of its discomfort with the price of credit.

For FY21, the bank's standalone net came at Rs 6,588 crore as against 1,627 crore in the fiscal ago period.

During the reporting quarter, its core net interest income grew 11 per cent at Rs 7,555 crore on the back of a 12 per cent growth in advances and the net interest margin being stable at 3.56 per cent.

Excluding the targeted long term repo operations (TLTRO) linked advances, the FY21 loan growth would have been 9.6 per cent.

On standalone basis, its total income during the March quarter stood at Rs 20,213.46 crore against Rs 20,219.57 crore in the year-ago period.

The bank's other income grew to Rs 4,668 crore in Q4FY21 from the year ago period's 3,985 crore, and the fee income grew 15 per cent.

It disclosed that it had received Rs 3,004 crore of restructuring requests under the special COVID-related window, of which Rs 1,848 crore have been invoked and Rs 623 crore have been implemented.

It will take a call on the rest by the June deadline, its chief financial officer Puneet Sharma said.

The bank's gross non-performing assets grew to 3.70 per cent in March, as against 3.44 per cent in the quarter ago period. Its fresh slippages came at Rs 5,285 crore during the quarter, with a bulk 64 per cent of them coming from the retail segment.

Its overall provisions less than halved at Rs 3,294 crore as against the Rs 7,730 crore in the year-ago period. It is carrying a dedicated Covid provisions of over Rs 5,012 crore for any future impact.

It also changed its policies of setting-aside money for small business loans as part of its strategy to be more conservative, which had a Rs 803 crore impact in the March quarter results, Sharma said, adding that there will be no such changes in provision policies in FY22.

Chaudhry said there will certainly be an impact of the second wave on the economy in the short term but hoped that the wave gets contained quickly with the various strategies being adopted by the government. He said the bank will have to change its policies on risk as per the evolving scenario.

He said the bank grew in FY21 as well despite the adversities on the overall economic front and would continue with the same strategy as it believes that the crisis also creates opportunities.

Its executive director Rajiv Anand said there are some signs of private sector capex, especially in the steel and cement sector on the back of the production-linked incentives scheme but stressed that these are early signs and it cannot be called as the beginning of a long capex cycle.

The bank will be more cautious on the unsecured loans, Anand said. Even though it wishes to grow both secured and unsecured retail products, the bank focused more on the secured retail piece in FY21 and the unsecured retail volumes have now touched 90 per cent of the volumes in the pre-COVID days.

The bank's overall deposit growth in FY21 came at 10 per cent, and share of the low-cost current and saving account advances stood at 42.4 per cent, up by over 3 percentage points.

Its overall capital adequacy stood at 19.12 per cent as on March 31, 2021.

Its subsidiaries delivered a 75 per cent growth in their collective profit after tax at Rs 822 crore in FY21, and Chaudhry said it is a continuous focus to derive more profits from the step-down arms.

The bank scrip closed 0.16 per cent down at Rs 699.30 a piece on the BSE, as against gains of 1.15 per cent on the benchmark.