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Axis Bank shrugs off weak Q4 numbers, rises on strong volumes

30 April 2018

Axis Bank Ltd, India's third-biggest private sector lender by assets, reported a surprise fourth-quarter loss, plagued by a rise in provisions for bad loans. The bottom-line reported net loss for the quarter at Rs. 2,188 crore in Q4FY18 vs net profit of Rs. 1,225 crore in Q4FY17 and Rs. 726 crore in Q3FY18.

Chandra Shekhar Ghosh, Managing Director and CEO of Bandhan Bank, calls FY18 a watershed year for the bank given the positive investor response to its initial public offering (IPO) that helped raise Rs 3,662 crore and improvement in asset quality, growth and profitability in each quarter.

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Shares of Axis Bank surged as much as 8 per cent today despite the private lender reporting its first ever quarterly loss on Thursday.

As on March 31, 2018, the bank's gross NPA and net NPA levels rose to 6.77 per cent and 3.40 per cent from 5.28 per cent and 2.56 per cent as on December 31, 2017 respectively. Despite the bank's upfront recognition of stressed assets, "residual pain is still left" and he expects Axis "to return to earnings normalcy" in the year ending March 2020.

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Even though it is well-capitalised with an overall buffer of over 18 per cent, the bank board has made a decision to raise up to United States dollars 1 billion in core equity, Kapoor said, adding it may consider raising the money by the end of the FY19 if it sees some opportunities for its use. "After making mandatory appropriations to statutory reserve, investment reserve and capital reserve, no profit is available for distribution as dividend for the financial year ended 31 March 2018". Most of the corporate slippages, nearly 90 per cent came from the BB book particularly the power sector The watch list is now closed and in Q4 it is (just) Rs 428 crore...

The bank, however, asserted that the asset quality recognition cycle was nearing an end after it significantly accelerated NPA recognition in the fourth quarter. Its retails loans grew by 99 per cent to 12.2 per cent of total advances, the lender said. The bank has retained provision coverage ratio at a healthy 65 per cent. "This journey continues", said Ms. Sharma, who has made a decision to step down from the helm at the end of December.

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According to the bank, recoveries and upgrades were Rs 3,401 crore while write-offs during the quarter were Rs 3,887 crore. It reached a day's high of Rs 500.35 on BSE and the day's bottom of Rs 484.65 before closing down 0.77 per cent at Rs 494.55 on BSE.

Axis Bank shrugs off weak Q4 numbers, rises on strong volumes