Axis Bank Q2 Results: One-time provision drags profit; Slippages, asset quality improve

Mumbai-based private lender Axis Bank Ltd. reported its results for the September quarter after market closing hours on Wednesday, October 15.

The lender's Net Interest Income (NII) or core income that it earns, increased by 1.9% from the year-ago period to ₹13,744 crore. A CNBC-TV18 poll had projected the figure to be ₹13,224 crore.

Net profit for the period stood at ₹5,090 crore, which is lower with the CNBC-TV18 poll figure of ₹5,692 crore. On a year-on-year basis, Axis Bank's net profit fell 26%.

Following an RBI advisory, Axis Bank has made an additional one-time standard asset provision of ₹1,231 crore during the September quarter for two discounted crop loan variants. The standard asset provision will be written back into the P&L, when all outstanding loans in the two discontinued product variants are recovered or closed in normal course of business by March 31, 2028, Axis Bank said in its notes to account.

The one-time provision led to a drag on the lender's bottomline.

Asset quality for the period was stable from the June quarter.

Gross NPA at the end of the September quarter stood at 1.46% from 1.57% in June, while net NPA stood at 0.44% from 0.45% in the previous quarter.

In absolute terms, Gross NPA at the end of the September quarter stood at 17,3078 crore from ₹17,764 crore. Net NPA stood at ₹5,114 crore from ₹5,065 crore in June.

"No divergence in asset quality or NPA provisioning was identified during the annual inspection by the RBI," Axis Bank said.

Gross slippages during the quarter stood at ₹5,696 crore, down from the ₹8,200 crore seen in June, but higher than the ₹4,443 crore reported in the same quarter last year. Recoveries and upgrades from NPAs stood at ₹2,887 crore. Axis Bank wrote off NPAs worth ₹3,265 crore.

Gross slippages due to the technical impact during the quarter stood at ₹1,512 crore, which declined by 44% from June, while net slippages due to the technical impact were ₹280 crore, down 85% sequentially. Provisions due to the technical impact stood at ₹256 crore, down 69% quarter-on-quarter.

Advances for the quarter grew by 11.7% on a year-on-year basis to ₹11.16 lakh crore, while deposits during the quarter grew by 10.7% to ₹12.03 crore from ₹10.86 crore last year.

Shares of Axis Bank ended 0.4% lower on Wednesday ahead of the earnings announcement, at ₹1,172.5. The stock has risen 6% in the last one month.