NEW DELHI: The March quarter for was a lot better than what Street had expected from it, as the lender continued the impressive show by private banks so far, thanks to decent growth in interest income and other income.

The bank came back in black during the quarter, improving from a loss in Q4 last year that was largely due to enhanced provisions. The asset quality of the bank also improved sharply despite the pandemic and net provisions came down as well. Its provision coverage is also more than mandated, the lender pointed out.

The bank’s operating profit for the quarter grew 17 per cent YOY and 13 per cent QOQ to Rs 6,865 crore. Net profit for Q4FY21 stood at Rs 2,677 crore, as compared to loss of Rs 1,388 crore in Q4FY20. Its subsidiaries also made the most of financialisation of India in a crisis year, with some of them multiplying their net profits many times.

Here are key takeaways from Axis Bank’s earnings announcement:

Subsidiaries in a sweet spot
Most of its subsidiaries delivered impressive numbers. Axis Securities’ broking revenues for FY21 grew 122 per cent YoY to Rs 425 crore and net profit for FY21 at Rs 166 crore grew to 10x of its FY20 PAT. Similarly, Axis Capital’s PAT stood at Rs 166 crore, up 66 per cent YoY.

The bank’s AMC business also doubled its PAT for the fiscal 2021 to Rs 242 crore from Rs 121 crore in FY20. In comparison, Axis Finance’s numbers were bit subdued with a 9 per cent YoY jump in PAT at Rs 211 crore.

Other income up 17 per cent

The other income of the bank rose 17 per cent during the quarter. The growth was led by almost tripling of trading income at Rs 789 crore. Fee income also showed an impressive jump at 15 per cent to Rs 3,376 crore.

Asset quality improves
As on March 31, 2021, the bank’s reported gross NPA and net NPA levels were 3.70 per cent and 1.05 per cent, respectively, as against 4.55 per cent and 1.19 per cent as on December 31, 2020. This reflects a decline of 116 bps and 51 bps, respectively, on a YoY basis and a decrease of 85 bps and 14 bps on GNPA and NNPA, respectively, on a sequential basis

Net provisions fall
Axis Bank said specific loan loss provisions for Q4FY21 were Rs 7,038 crore, including reclassification of NPA provision of Rs 4,266 crore on account of Supreme Court judgment shown as other provision in prior quarter, compared to Rs 4,204 crore in Q4FY20.

During the quarter, the bank made additional provision aggregating Rs 803 crore on account change in NPA provision rates on loans to commercial banking segment. Net of the above 2 adjustments, specific loan loss provision for Q4 FY21 would have been Rs 1,969 crore.

Management commentary
Amitabh Chaudhry, MD & CEO, Axis Bank: “As an organization, we have traversed a phenomenal distance last year. We have transformed ourselves in line with the evolving business scenario to become more agile, more relevant and totally dedicated to the needs of millions of customers. From strengthening our digital capabilities, providing flexible employment opportunities to play our part in the community during these difficult times, Axis has come a long way and we hope to continue with the good work.”

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