Axis Bank Q3 net jumps 25.3%

Axis Bank Q3 net jumps 25.3%

Axis Bank Q3 net jumps 25.3%

A steep fall in provisions for bad assets has helped the third largest private sector lender Axis Bank to report a 25.34% growth in the December quarter net at Rs 726.44 crore.

The drop in provisions for the bank, which has been fighting the bad loan issue since the Reserve Bank came out with its asset quality review last year, and also as a result of under-reporting it in the past, was possible due to a 50% reduction in fresh slippages at Rs 4,428 crore.

Axis Bank CFO Jairam Sridharan said that during the reporting quarter, the bank has returned to the average rate of slippages seen before the divergence instructions from the RBI, and added that with the recognition process getting complete, a lot of the focus will now shift to resolution.

He said the bank's watchlist of doubtful accounts has dropped to 15 with an exposure of Rs 5,300 crore from Rs 22,600 crore seven quarters ago, and that the newer slippages being witnessed are of the leftovers and not chunky accounts.

The bank also fared well on recoveries and upgrades with Rs 4,008 crore in recoveries, while its write- offs stood at Rs 2,822 crore. As a result, total provisions came down by 25% to Rs 2,811 crore helping its provision coverage ratio move up to 65% , and Sridharan said the bank plans to maintain it between 60% and 65%.

During the quarter, the gross non-performing assets ratio moved up to 5.28%.

Despite a 21% growth in credit, the core net interest income grew only 9% to Rs 4,732 crore, possibly restricted by a 0.11% compression in margins at 3.60%.