Axis Bank is the third-largest private sector bank in India. Axis Bank offers the entire spectrum of services to customer segments covering large and mid-corporates, SME, Agriculture, and Retail Businesses. With its 4,528 domestic branches (including extension counters) and 12,044 ATMs across the country as on 31st March 2020, the network of Axis Bank spreads across 2,559 centers, enabling the Bank to reach out to a large cross-section of customers with an array of products and services.

Shares of Axis Bank Ltd climbed more than 7% intraday on 28th April 2020 ahead of the result.

The bank's net interest income (NII) rose by 6% sequentially and 19% YoY to Rs 6,808 crore during Q4FY20. NII for FY20 rose 16% YOY to Rs 25,206 crores from Rs 21,708 crores in FY19. The net interest margin (NIM) for Q4FY20 was 3.55% and 3.51% for FY20. The Non-Interest Income comprising of fee, trading profit, and miscellaneous income for Q4FY20 grew 13% to Rs 3,985 crores. Retail fees constituted 64% of the Bank’s total fee income. Miscellaneous Income, for the quarter, stood at Rs 790 crores as compared to Rs 153 crores in Q4FY19 driven by higher recoveries during the quarter. For FY20, non-interest Income grew 18% YOY and stood at Rs 15,537 crores, of which fee income grew 9% YOY primarily driven by 15% YOY growth in Retail fee and 6% YOY growth in Transaction banking.

The Mumbai-based bank's gross non-performing assets (NPAs) and net NPA levels stood at 4.86% and 1.56%, as against 5.00% and 2.09% respectively as on 31st December 2019. The bank has also recognised slippages of Rs 3,920 crores during Q4FY20 as compared to Rs 6,214 crores in Q3FY20 and Rs 3,012 crores in Q4FY19. The slippages from the loan book were at Rs 3,418 crores, while from investment exposure were at Rs 502 crores. Corporate slippages were at Rs 1,839 crores. Out of the total slippages, 84% constituted from previously disclosed BB and below rated clients. The recoveries and upgrades from NPAs during the quarter were Rs 2,489 crores while write-offs were Rs 1,270 crores. As on 31st March 2020, the Bank’s Gross NPA stood at Rs 30,234 crores and Net NPA stood at Rs 9,360 crores while the provision coverage ratio (PCR), as a proportion of Gross NPAs, stood at 69%.

In terms of provisions and contingencies, the bank's specific loan loss provisions for the quarter stood at Rs 4,204 crores as compared to Rs 1,714 crores YoY and Rs 2,962 crores sequentially and held additional provisions of around Rs 2,558 crores towards various contingencies at the end of the third quarter. The bank provided Rs 3,000 crores for the coronavirus impact. With this, Axis Bank's provisions are above and over the NPA provisioning that is included in the PCR while the standard asset provisioning stood at 0.4% on standard assets.

Overall, the lender's operating profit for the quarter was Rs 5,851 crores, up 17% YOY from Rs 5,014 crores in Q4FY19. Net loss for Q4FY20 stood at Rs 1,388 crores on account of higher provisions taken in FY20 and the one time DTA (deferred tax asset) charge taken in Q2FY20 to incorporate revised corporate tax rates.

Axis Bank today signed an agreement with Max Financial Services to become joint venture partners in Max Life Insurance Company Limited (Max Life) and with this, the bank will hold a 30% stake in Max Life. This agreement will result in a mutually beneficial and enduring relationship bringing the stability of a long term partnership to India’s fourth-largest private life insurance franchise.

According to Mr. Amitabh Chaudhry, CEO of Axis Bank the deposit book remained resilient and grew 19% YoY while the loan book grew by 15%. The bank's capital position remains healthy has one of the highest capital levels in the industry. On the bank's loan book, the quality of the retail book is the best in class with 80% of the book being secured.

Overall, the impact of Covid seems to be more severe than initially envisaged, and hence financials in general could have a tough time maintaining profitability in the near future.

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