All around, the earnings of Axis Bank for Q1FY20 were very good, with profitability along with asset quality improving.
Its net profit jumped up 95% (YoY) at Rs.1370 crore – the profits would have been much lower but for the one-time provisioning cost of Rs.495 crore due to changes in internal guidelines. NII rose 13% at Rs.5844 crore. What really helped was the Treasury gains, profit earned on market operations while Corporate Banking was disappointing and Retail showed a flat trend.
Asset quality was better. Gross NOA fell marginally from 5.26% to 5.25% (QoQ) and Net NPA too fell a bit from 2.06% to 2.04%.
Slippages rose from Rs.3012 crore to Rs.4798 crore (QoQ). Total provisions rose to Rs 3,814 crore v/s Rs 2,711.4 crore and the provision coverage ratio now stands at 78%.
Till yesterday, the stock price had gone up 15% in the year, almost double the rise in the NSE Nifty Bank Index and that explains why the profit booking came in today. Apart from profit booking, the results were below “expectations” and the stock price opened lower at Rs.694, going down to an intraday low at Rs.657.65, slipping down 7%.