Mumbai: Private sector lender Axis Bank on Tuesday failed to meet street expectations as it reported higher slippages and had higher write-offs during Q1FY20. The Bank reported 95 per cent year-on-year rise in net profit to Rs 1,370 crore during April to June 2019 on the back of higher net interest income and other income.
As the stressed loan additions continues in the system, many feel that the credit cost may not normalise for the lender and achieving 18 per cent return on equity as guided by its management would be difficult to achieve. The net interest income or the difference between interest earned and that expended rose 13 per cent year-on-year to Rs 5,843.65 crore in the quarter ended June 2019, against Rs 5,166.80 crore during the same period of last year. Net interest margin for Q1FY20 was 3.40 per cent.
Non interest income which comprises of fee, trading profit and miscellaneous income rose 32 per cent to Rs 3,869 crore for the June quarter.
"Asset quality was disappointing as fresh slippages were Rs 4,798 crore during Q1FY20. The gross non performing assets looked stable as the bank wrote off Rs 3,000 crore during the quarter compared to Rs 1,700 crore during Q4," said Asutosh Mishra, Head of Research, Institutional Equities at Ashika Stock Broking.
The bank said it downgraded Rs 2,242 crore into the BB pool during the quarter mostly from stressed groups. Post the action, the bank's BB and below rated book remained largely stable quarter on quarter and stood at Rs 7,504 crore. This is 1.3 per cent of the bank's gross customer assets, significantly down from 7.3 per cent at peak the lender said.
The gross NPA was 5.25 per cent and net NPA was 2.04 per cent.
