Axis Bank posted a disappointing set of earnings for Q3FY21. Its net profit fell 36% (YoY) at Rs.1117 crore on the back of a 33% increase in provisions and contingencies at Rs 4,604 crore.
The Bank said that Specific loan loss provisions for the December quarter were Rs 1,053 crore v/s Rs.2962 crore (YoY). The Bank has made provisions on 90+ DPD accounts not classified as NPA pursuant to the Supreme Court judgment, at rates that would have applied to these accounts per extant provisioning rules for NPA in the Banks, amounting to Rs 3,899 crore during the quarter.
On the asset quality front, its Gross NPA was down 74bps (QoQ) to 3.44% and Net NPA came down 24 bps to 0.74%. But under the IRAC norms (Income Recognition and Asset Classification), Gross NPA would have been 4.55% and Net NPA ratio would have been 1.19%. This reflects decline of 45 bps and 90 bps, respectively on a YoY basis and an increase of 27 bps and 16 bps on NPA and NPA, respectively on a sequential basis.
The reported gross slippages for quarter were almost nil, since the entire quarter was subject to the standstill benefit, pursuant to the Supreme Court decision. But as per IRAC norms, Gross slippages were Rs 6,736 crore v/s Rs 1,572 crore (QoQ) v/s Rs 6,214 crore (YoY).
Slippages from the loan book per IRAC norms were at Rs 6,499 crore and that from investment exposures stood at Rs 236 crore.
The market actually gave these numbers a thumbs up, following the view of various fund managers and analysts that the worst is behind it and it will soon see a re-rating as it returns to normalcy. CLSA has in fact raised its target for the stock to Rs.1000.
The stock is in the green though it opened 2.5% lower at Rs.617 and as these reports started coming in, the stock rose 4% to Rs.656.90, with an over 3-times jump in volumes.