AXIS BANK ANNOUNCES FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED 30th SEPTEMBER 2016
Results at a Glance
* Asset Quality metrics rise, driven by Watch List:
- The Bank’s Gross NPA and Net NPA rose to 4.17% and 2.02% respectively in Q2 FY17.
- Watch List loans as on September 30, 2016 reduced by 32% quarter on quarter and stood at Rs. 13,789 crores.
- The Watch List has reduced to 3.5% of customer assets in September 2016, from 5.4% in June 2016 and 6.2% in March 2016.
* Profit After Taxes de-grows, stable operating performance:
- Net Profit for Q2FY17 & H1FY17 stood at Rs. 319 crores and Rs. 1,875 crores respectively and reported a drop of 83% YOY and 52% YOY respectively.
- Operating Profit grew by 13% YOY while Net Interest Income grew by 11% YOY.
- Net Interest Margin for Q2 FY17 stood at 3.64%.
- Other Income (including fee and trading profits) grew 24% YOY.
* Growth continues to be strong:
- Net Advances grew 18% YOY, led by Retail, which grew 25% YOY.
* Retail business continues to thrive:
- CASA grew 19% YOY and constituted 45% of Total Deposits as on 30th September 2016.
- Savings Account balances grew 20% YOY and stood at Rs. 107,839 crores as on 30th September 2016.
- Retail Advances accounted for 42% of Net Advances.
- Retail Fee Income in Q2FY17 grew 17% YOY and constitutes 43% of Total Fee Income.
* The Bank’s Capital Adequacy Ratio (CAR) remains healthy. Under Basel III, Total CAR & Tier I CAR (including the net profit for H1FY17) stood at 15.20% and 12.03% respectively.
The Board of Directors of Axis Bank Limited approved the financial results for the quarter and half-year ended 30th September 2016 at its meeting held in Mumbai on Tuesday, 25th October 2016. The accounts have been subjected to a Limited Review by the Bank’s Statutory Auditors.
* Operating Profit and Net Profit
Operating Profit for Q2FY17 and H1FY17 grew by 13% and 11% to Rs.4,100 crores and Rs.8,570 crores respectively. The Net Profit for Q2FY17 and H1FY17 contracted by 83% and 52% YOY to Rs.319 crores and Rs.1,875 crores respectively.
* Net Interest Income and Net Interest Margin
The Bank’s Net Interest Income (NII) grew by 11% YOY to Rs.4,514 crores during Q2FY17 from Rs.4,062 crores in Q2FY16. Net interest margin for Q2FY17 stood at 3.64%. NII for H1FY17 also rose 11% YOY to Rs.9,031 crores from Rs.8,118 crores during H1FY16.
* Other Income
Other income (comprising fee, trading profit and miscellaneous income) for Q2FY17 stood at Rs.2,540 crores as against Rs.2,041 crores during the same period last year. During H1FY17, other income grew 22% YOY and stood at Rs.5,278 crores. Fee income for Q2FY17 grew 7% YOY to reach Rs.1,935 crores. The key driver of fee income growth was Retail Banking, which grew by 17% YOY and constituted 43% of the Bank’s total fee income. Transaction Banking fee performance too was healthy and grew 8% YOY to constitute 26% of the total fee income of the Bank. Trading profits for the quarter grew 220% YOY and stood at Rs.536 crores. During H1FY17, fee income grew 9% YOY primarily driven by 18% YOY growth in Retail fee and 12% YOY growth in Transaction Banking.
The Bank’s Balance Sheet grew 17% YOY and stood at Rs.557,650 crores as on 30th September 2016. The Bank’s Advances grew 18% YOY to Rs.353,170 crores as on 30th September 2016. Retail Advances grew 25% YOY and stood at Rs.149,284 crores and accounted for 42% of the Net Advances of the Bank. Corporate credit grew 14% YOY and stood at Rs.158,029 crores; and accounted for 45% of Net Advances. SME Advances grew 14% YOY and stood at Rs.45,857 crores.
The book value of the Bank’s investments portfolio as on 30th September 2016, was Rs.124,590 crores, of which Rs.92,196 crores were in government securities, while Rs.23,852 crores were invested in corporate bonds and Rs.8,542 crores in other securities such as equities, preference shares, mutual funds, etc.
CASA Deposits as on 30th September 2016 constituted 45% of total deposits. Savings Account balances grew at a strong 20% YOY, up from the 12% YOY growth reported for the period ended 30th September 2015. CASA, on a daily average basis, recorded a growth of 18%, in which both Savings Bank Deposits and Current Account Deposits recorded a growth of 18% YOY. The proportion of CASA on a daily average basis remained at the same level as the previous quarter and constituted 41% of total deposits.
CASA and Retail Term Deposits constituted 81% of Total Deposits as on 30th September 2016 compared to 80% as on 30th September 2015.
Capital Adequacy and Shareholders’ Funds
The shareholders’ funds of the Bank grew 10% YOY and stood at Rs.53,823 crores as on 30th September 2016. The Bank is well capitalised. Under Basel III, the Capital Adequacy Ratio (CAR) and Tier I CAR (including net profit for H1FY17) as on 30th September 2016 was 15.20% and 12.03% respectively.
Asset Quality
As on 30th September 2016, the Bank’s Gross NPA and Net NPA levels were 4.17% and 2.02% respectively, as against 2.54% and 1.08% respectively as on 30th June 2016.
As on 30th September 2016, the Bank’s Gross NPA was Rs.16,379 crores against Rs.9,553 crores as on 30th June 2016. During the quarter, the Bank added Rs.8,772 crores to Gross NPAs, and Recoveries and upgrades were Rs.1,073 crores and write-offs during the quarter were Rs.873 crores.
As on 30th September 2016, loans outstanding on the Bank’s Watch List reduced 32% over the previous quarter and stood at Rs.13,789 crores. The reduction in the Watch List primarily represents slippages to NPAs amounting to Rs.7,288 crores, which comprises 89% of the total corporate credit slippages. The Watch List has reduced to 3.5% of customer assets in September 2016, from 5.4% in June 2016 and 6.2% in March 2016.
The cumulative value of net restructured assets as on 30th September 2016 stood at Rs.6,702 crores, constituting 1.74% of net customer assets, compared to Rs.7,363 crores, constituting 1.99% of net customer assets as on 30th June 2016.
During the quarter, the Bank sold assets with a gross outstanding of Rs.2,316 crores and a net book value of Rs.1,128 crores to ARCs against net sale consideration of Rs.822 crores comprising Rs.159 crores in cash and Rs.663 crores in Security Receipts value.
Network
During Q2FY17, the Bank added 100 branches to its network across the country. As on 30th September 2016, the Bank had a network of 3,106 domestic branches and extension counters situated in 1,920 centres compared to 2,743 domestic branches and extension counters situated in 1,796 centres last Year. As on 30th September 2016, the Bank had 13,448 ATMs and 1,210 cash recyclers spread across the country.
International Business
The Bank has nine international offices with branches at Singapore, Hong Kong, Dubai (at the DIFC), Colombo and Shanghai; representative offices at Dubai, Abu Dhabi, Dhaka and an overseas subsidiary at London, UK. The international offices focus on corporate lending, trade finance, syndication and investment banking and liability businesses. The total assets under overseas branches were USD 8.67 billion as on 30th September 2016.
