Shares of Axis Bank declined 3.5 per cent to hit an intraday low of Rs 729.50 on BSE after the lender posted its results for the quarter ended June 2021.
The country’s fourth-largest private sector bank by market value reported a 94 per cent year-on-year (YoY) increase in its net profit at Rs 2,160 crore for the quarter ended June 2021, mainly due to lower provisions. Profit in the year-ago period stood at Rs 1,112 crore.
The stock ended 3.23 per cent lower at Rs 731.75 against the previous close of Rs 756.15 on BSE. Market cap of the bank fell to Rs 2,24,310.70 crore.
The bank’s net interest income (NII) rose 11 per cent YoY to Rs 7,760 crore, while the net interest margin (NIM) was at 3.46 per cent.
The bank’s provisions stood Rs 3,532 crore during the quarter under review against Rs 4,416 crore in the year-ago quarter. “Specific loan loss provisions for Q1FY22 were Rs 3,151 crore compared to Rs 3,512 crore in Q1FY21,” Axis Bank said.
The loan book grew 12 per cent YoY, driven by growth in all three business segments. While retail loans grew 14 per cent YoY, corporate loans rose 8 per cent, and small and medium enterprises loans were up by 18 per cent.
On the asset front, Axis Bank’s gross non-performing assets (NPAs) rose to 3.85 per cent from 3.70 per cent a year ago, while net NPAs also increased to 1.20 per cent from 1.05 per cent.
“Gross slippages during the quarter were Rs 6,518 crore, compared to Rs 5,285 crore during Q4FY21 and Rs 2,218 crore in Q1FY21. Slippages in Q1FY21 were moderated due to regulatory forbearances that do not exist in the current quarter. Recoveries and upgrades from NPAs during the quarter were Rs 2,543 crore while write-offs were Rs 3,341 crore,” the bank said.
Axis Bank has also bought 5.55 per cent stake in financial technology firm IBBIC. “The bank has subscribed to 50,000 equity shares of the face value of Rs 10 each fully paid up of IBBIC Private Ltd (IBBIC) for a consideration of Rs 10 per equity share constituting 5.55 per cent of the issued and paid-up capital of IBBIC,” Axis Bank said in a separate press release.
Incorporated in May this year, IBBIC platform offers distributed ledger technology (DLT) solutions to the Indian financial services sector.
“While slippages could remain elevated in the near term, healthy PCR of ~70%, coupled with additional provision buffer of 2% (including standard provisions) is likely to protect the Balance Sheet against any potential stress,” Motilal Oswal said.
The brokerage house has a ‘Buy’ rating with a target price of Rs 925 per share.
