Provisions for possible reverses due to COVID-19 crisis and a shift in accounting practices to be more conservative led private sector lender Axis Bank to report a 19 per cent decline in net profit for the June quarter. The third-largest private sector lender's standalone profit dipped to Rs 1,112 crore in April-June as against Rs 1,370 crore in the year-ago period.

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"We will remain cautious and conservative because we believe the crisis is yet to play out," its managing director and chief executive Amitabh Chaudhry told reporters, adding it will seek to capitalise whenever presented with an opportunity.

The bank set aside an additional Rs 733 crore towards the impact of the pandemic on the business, taking the total size of the buffer to Rs 3,733 crore as against a regulatory requirement of having a provision of only Rs 659 crore.

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The cumulative amount of provisions it is carrying is nearly Rs 7,000 crore, which is at 1.56 per cent of its standard assets as of June 30.

It can be noted that many banks are expecting heavy reverses on the loanbook because of the COVID pandemic and bolstering their buffers through capital raising exercises.

Axis Bank board has given an enabling provision to raise up to Rs 15,000 crore despite having very strong reserves through a Rs 12,500 crore infusion last year.

"We continually evaluate various capital raising initiatives from time to time for our business. We have an enabling resolution from our Board, pending approval from our shareholders that will allow us to raise funds over the next one year," Chaudhry said, declining to comment on the timeline of the planned exercise or when will it be needed.

Its overall capital adequacy ratio stood at 17.29 per cent as of June 30, 2020.

A senior bank official said the picture regarding the asset quality ? which typically determines the need for additional capital ? will be clear by the December or the March quarter itself depending on the regulatory forbearances on loan recognition. More than the moratorium, it is GDP growth and job losses which will determine the trajectory on asset quality, he said.

The proportion of borrowers who have opted for moratoriums on loans has decreased to 9.7 per cent by value from a peak of up to 28 per cent, its chief financial officer Puneet Sharma said, adding that the bank has been 'judicious' in offering the facilities which are open for all borrowers.

The proportion of the advances to the below investment grade companies reduced to 1 per cent as of June 2020 from 1.32 per cent of the book in the year-ago period, while the overall gross non-performing assets declined to 4.72 per cent from the 4.86 per cent level three months ago.

Chaudhry also said that during the June quarter, it has ushered changes in fee recognition, increased provisioning and interest recognition which dented the profit after tax by Rs 513 crore collectively. With the changes carried out now, the shift to being more conservative is done now, he said.

During the quarter under review, its core net interest income grew 20 per cent to Rs 6,985 crore on the back of a 13 per cent growth in advances and a narrowing of net interest margin to 3.40 per cent as against 3.55 per cent.

Its advances growth was majorly riding on the corporate loans, which grew 26 per cent, it said, adding that two-thirds of this was working capital demand and 22 per cent were towards capex. Retail segment grew 16 per cent, while the small business segment was down 7 per cent.

It has disbursed Rs 1,400 crore of loans to small businesses under a credit guarantee scheme and approved over Rs 3,000 crore, its executive director Rajiv Anand said, adding that loans to small businesses de-grew 7 per cent because of cautious approach towards auto dealers.

The other income dropped 33 per cent to Rs 2,587 crore majorly because of the disappearance of retail processing fees.

The bank scrip gained 2.86 per cent to close at Rs 446.20 apiece on the BSE as against gains of 1.37 per cent on the benchmark on Tuesday.