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Axis Bank reported a 43 per cent decline in net profit in the fourth quarter due to sharp jump in provisions, including for loan losses and investment depreciation.
India’s third-largest private sector bank logged a net profit of ₹1,225 crore in the reporting (Q4) quarter ended March 31, 2017 as against ₹2,154 crore in the year-ago quarter.
For the full year ended March 31, 2017, the net profit was down 55 per cent at ₹3,679 crore (₹8,224 crore in FY16).
The board of directors recommended a dividend of ₹5 per share (250 per cent), which is the same as in the previous year, for the reporting year.
In the reporting quarter, net interest income (interest income less interest expended) nudged up 4 per cent to ₹4,729 crore (₹4,553 crore in Q4 FY16).
Other income, comprising fee income, trading income and miscellaneous income, was up 12 per cent at ₹3,013 crore (₹2,694 crore).
Overall provisions, including for loan losses and investment depreciation, soared to ₹2,581 crore (₹1,169 crore).
Global net interest margin (NIM) edged lower to 3.83 per cent in Q4 FY17 from 3.97 per cent in Q4 FY16. However, quarter-on-quarter, NIM moved up 40 basis points on interest reversal, lower cost of funds and a shade higher yield on assets.
Jairam Sridharan, Group Executive and Chief Financial Officer, said given the liquidity in the banking system is high and credit demand is muted, NIM could see some compression, going forward.
Powered by growth in retail advances and small and medium enterprise loans, total advances grew 10 per cent year-on-year (y-o-y) to ₹3,73,069 crore as at March-end 2017. Corporate loan growth was muted. Deposits were up 16 per cent y-o-y to ₹4,14,379 crore.
From an asset quality perspective, power sector was a cause for concern, said Sridharan.
Gross non-performing assets to gross advances ratio increased to 5.04 per cent as at March-end 2017 from 1.67 per cent in March 2016.
Siddharth Purohit, Senior Equity Research Analyst, Angel Broking, said,“Axis Bank’s Q4 FY17 results have been encouraging. After witnessing deterioration in asset quality for the last few quarters the bank has started showing some sign of improvement.”
Axis Bank shares closed at ₹517.30 apiece, up 0.42 per cent over the previous close on the BSE.
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