Axis Bank's Q3FY18 net profit comes at Rs 726 crore; gross NPAs stable

Private lender Axis Bank missed analysts’ estimates reporting over 25% year-on-year growth in bottom-line (net profit) for the third quarter ended December 31, 2017 (Q3FY18).

The bank posted net profit of Rs 726.44 crore in Q3FY18, witnessing rise of 25.34% from Rs 579.57 crore in the corresponding period of the previous year.

Q3FY18 net profit was also higher by a whopping 68% from Rs 432.38 crore in the preceding quarter.

A Bloomberg poll of analysts estimated Axis Bank’s net profit to come in at Rs 830 crore during the quarter.

Net Interest Income (NII) came in at Rs 4,731.52 crore in Q3, also growing by 9.18% from Rs 4,333.73 crore in Q3FY17 and up by 4.23% from Rs 4,539.62 crore in Q2FY18.

Net Interest margin so far stands at 3.48% for Axis Bank in fiscal FY18.

Interestingly, provisions of the bank stood at Rs 2,811.04 crore, registering decline of 25.94% from Rs 3,795.80 crore in Q3FY17 and down by 10.48% from Rs 3,140.41 crore in Q2FY17.

As on December 2017, Axis Bank’s provision coverage, as a proportion of Gross NPAs including prudential write-offs, increased to 66% from 60% in Q2FY18.

It may be noted that gross non-performing assets (GNPA) on other hand, increased by 22.15% to Rs 25,000.51 crore in Q3 versus Rs 20,466.82 crore in Q3FY17. However, current quarter’s GNPA is down by 8.76% from Rs 27,402.32 crore in Q2FY18.

In percentage terms, GNPA of the bank came in at 5.28% in Q3FY18 - sequentially up from 5.22% in Q3FY17, but lower if compared with 5.90% GNPA recorded in Q2FY17.

Axis Bank highlighted that corporate slippages stood at Rs 2,980 crores and 93% of it came from low rated BB & below accounts. Net slippage (before write-offs) in Retail and SME stood at Rs 599 crores and Rs 166 crores, respectively.

In its financial audit, Axis Bank also mentioned about its exposure in the Reserve Bank of India’s (RBI) list of defaulters.

It stated that total loan amount outstanding the IBC accounts mentioned in the two lists referred by RBI has declined by 14% compared to the amount outstanding as on 30th September 2017.

Outstanding under these accounts stood at Rs 6,074 crores as on 31st December 2017. For this, the bank made incremental provisions of Rs 237 crores during the quarter taking the total provisioning towards these select accounts to Rs 4,123 crores, resulting in an increased provision coverage of 68% on these select accounts.

Loans’ outstanding on the Bank's watch list declined 12% over the previous quarter and stood at Rs 5,309 crores as on December 2017.

Here are the key highlights of Axis Bank’s performance in Q3FY18:

Fee income grew 24 % YOY and stood at Rs 2,246 crores.
Operating expenses grew at a slower rate of 12% YOY.
Core operating profit grew 17% YOY and stood at Rs 3,654 crores.
Bank’s Balance Sheet grew 11% YOY and stood at Rs 6,43,938 crores as on 31st December 2017.
Bank’s Advances grew 21% YOY to Rs 4,20,923 crores.
Retail and SME loan book grew 29% YOY and 27% YOY to Rs 1,93,296 crores and Rs 54,884 crores respectively.
Corporate loan growth improved to 12% YOY to Rs 1,72,743 crores, led by working capital up 49% YOY.
CASA deposits on a cumulative daily average basis grew 21% YOY.
CASA deposits on period end basis grew 14% YOY and constituted 49% of total deposits.
Bank’s Capital Adequacy Ratio (CAR) is stronger post capital raise: Under Basel III, Total CAR &
Tier I CAR (including net profit for 9MFY18) stood at 18.00% and 14.13%, respectively.
For nine month's period in FY18, net profit of Axis Bank stood at Rs 2,464 crores, while NII resulted in Rs 13,887 crores. 

The credit cost for the third quarter and first nine months of this fiscal has been 233 basis points and 250 basis points.

Axis Bank said, "We continue to retain our credit cost guidance for fiscal 2018 in the range of 220-260 basis points."

After the result announcement, Axis Bank touched a 52-week high of Rs 617.60 on BSE. At around 1427 hours, the share price of the bank is trading at Rs 614.25 up Rs 24 or 4.07% on the index.