Axis Bank results: FY20 profit plunges 65% to Rs 1,627 crore on higher provisions, one time DTA charge

Private sector lender Axis Bank on Tuesday reported a 65 per cent decline in its net profit at Rs 1,627 crore for the financial year ended March 31, 2020, compared to Rs 4,677 crore during FY19. The profit was impacted by higher provisions taken in FY20 and the one time deferred tax assets (DTA) charge in Q2 to incorporate revised corporate tax rates, the bank said in a regulatory filing.

"Adjusted for these one-offs, net profit for FY20 would have been Rs 5,182 crore, up 11 per cent year-on-year (YOY) basis," Axis Bank said in a filing to the Bombay Stock Exchange.

For the fourth quarter ended March 31, 2020 (Q4 FY20), the bank reported a net loss of Rs 1,387.78 crore versus net profit of Rs 1,505.06 crore for the corresponding period last year, due to higher provisioning amid coronavirus pandemic. The private sector lender said its provisions rose sharply to Rs 7,730 crore in Q4FY20, from Rs 3,471 crore in Q3FY20.

Net interest income increased 19.31 per cent YoY to Rs 6,808 crore in Q4 FY20, while net interest margin for Q4 FY20 improved to 3.55 per cent from 3.44 per cent during Q4 FY19.

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For FY20, Net Interest Income, the difference between interest earned and interest expended, grew 16 per cent to Rs 25,206 crore in FY20 from Rs 21,708 crore in FY19. Net interest margin for FY20 stood at 3.51 per cent. Operating profit rose by 23 per cent YoY to Rs 23,438 crore in FY20.

Non-interest income grew 18 per cent YOY to Rs 15,537 crore in FY20, of which fee income grew 9 per cent YOY primarily driven by 15 per cent YOY growth in retail fee and 6 per cent YOY growth in transaction banking. For FY20, the recoveries in written-off accounts stood at Rs 1,553 crore.

Commenting on earnings, Amitabh Chaudhry, MD and CEO, Axis Bank said, "The crisis we are facing as a nation is a long drawn one and it will need courage, grit and a fighting spirit to combat it. We are now exploring if WFH can become a part of our work culture going ahead. We will keep learning and pushing our limits to emerge stronger as an organisation."

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On the asset quality front, the gross non-performing assets (GNPAs) declined marginally to 4.86 per cent of gross advances in Q4 FY20 as against 5 per cent in Q3 FY20. The net non-performing assets (NNPAs) were 1.56 per cent of net advances as on March 31, 2020 as compared to 2.09 per cent on December 31, 2019.

In absolute term, the bank's gross NPA stood at Rs 30,234 crore and Net NPA stood at Rs 9,360 crore.

On current situation, the bank said it was quick to recognise the gravity of the situation -a senior Central Emergency Response Team (CERT) was activated over a month before the lockdown. "The bank has been continuously monitoring the situation since, charting out steps to protect its stakeholders, while also providing uninterrupted and seamless services to customers through digital channels and branches," it said.

Over 99 per cent of branches and 96 per cent of the bank's ATMs are operational, it added.

In a separate development, Axis Bank's board has authorised the lender to raise funds by issue of debt instruments up to an amount of Rs 35,000 crore, subjected to shareholders approval at the 26th Annual General Meeting of the bank. The debt securities can be issued in Indian currency / foreign currency including but not limited to long term bonds, non-convertible debentures, perpetual debt instruments and Tier II Capital Bonds or such other debt securities.

Ahead of earnings announcement, shares of Axis Bank closed Tuesday's trade at Rs 455.55 apiece, up 6.61per cent, against previous closing price of Rs 427.30 on the Bombay Stock Exchange.