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Axis Bank: Provisioning Pain Lingers in FY17 - Views on News from Equitymaster
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Axis Bank: Provisioning Pain Lingers in FY17
Aug 3, 2016

Axis Bank declared the results for the first quarter of the financial year ended March 2017 (1QFY17). The bank has reported 11.4% YoY growth in net interest income while net profits declined 21.4% YoY in 1QFY17. Here is our analysis of the results.

Performance summary
  • Net interest income grows by 11.4% YoY during 1QFY17 on the back of 21% YoY growth in advances.
  • Net interest margins (NIM) remained flat at 3.8%.
  • Net profits declined by 21.4% YoY in 1QFY17 despite steep growth in provisions.
  • Both the gross (2.5%) and net NPA (1.1%) levels were higher than 1.4% and 0.5% levels respectively in June 2015.
  • Capital adequacy ratio (CAR) remained stable at 15. 7% at the end of June 2016 as per Basel III norms (Tier 1 capital at 12.4%).

    Rs (m) 1QFY16 1QFY17 Change
    Interest income 99,361 111,139 11.9%
    Interest expense 58,799 65,970 12.2%
    Net Interest Income 40,562 45,169 11.4%
    Net interest margin (%) 3.8% 3.8%
    Other Income 22,983 27,383 19.1%
    Other Expense 22,624 27,858 23.1%
    Provisions and contingencies 11,218 21,172 88.7%
    Profit before tax 40,921 44,694 9.2%
    Tax 9,919 7,967 -19.7%
    Profit after tax/ (loss) 19,784 15,555 -21.4%
    Net profit margin (%) 19.9% 14.0%
    No. of shares (m)* 2,387.3
    Book value per share (Rs) 229.8
    P/BV (x)* 2.4

    *Book value as on 31st June 2016

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DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
  2. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
  3. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
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  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
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  4. Equitymaster's Associate has received compensation for products or services other than investment banking or merchant banking or brokerage services from Axis Bank in the past twelve months.
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