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Citibank deal drives Axis Bank to Q4 loss

Excluding the Citi deal, the private lender would have reported a net profit of 6,625 crore in the fiscal fourth quarter ended 31 March. The consensus estimate in a Bloomberg survey of analysts was for a net profit of 2,532 crore.

Axis Bank announced on 1 March the completion of the acquisition of Citi India’s consumer banking business for 11,603 crore .

The bank said in a statement on Thursday that it made prudent accounting choices in relation to one-time items of 12,490 crore.

Total provisions and contingencies fell 69% from a year earlier in Q4 to 306 crore. Of this, provisions towards loan losses stood at 270 crore. The bank said it has not utilized covid-19 provisions during the quarter and holds cumulative provisions of 11,928 crore as of March-end. This is over and above the bad loan provisioning included in the provision coverage ratio calculations, it said.

Axis Bank’s net interest income (NII) or the difference between interest earned and interest expended rose 33% from a year earlier to 11,742 crore while net interest margin (NIM)—a key measure of profitability—stood at 4.22%, an increase of 73 basis points (bps) from a year earlier.

“Our margins are 42 bps above our structural guidance on a reported basis. We have a significant cushion to our margins and we still believe depending on where rates move, we have enough ability on our P&L to deliver our aspirational return ROE,” said Puneet Sharma, chief financial officer, Axis Bank.

The bank’s gross non-performing asset (NPA) ratio –bad loans as a percentage of gross advances —was at 2.02% in Q4, down 36 bps sequentially. Post provisions, the net NPA ratio was at 0.39% in Q4, down 8 bps sequentially. The bank’s gross slippages in Q4 FY23 stood at 3,375 crore, compared to 3,807 crore in Q3 FY23 and 3,981 crore in Q4 FY22.

Axis Bank’s advances grew 19% y-o-y and 11% sequentially to 8.45 trillion as on 31 March. While corporate loan grew 14% y-o-y to 2.65 trillion, retail loans grew 22% to 4.87 trillion. Its total deposits grew 15% y-o-y and 12% sequentially on period-end basis to 9.46 trillion.

“The pricing environment is quite conducive at this point in time for us to be able to continue to support credit growth,” said Rajiv Anand, deputy managing director, Axis Bank.

“…like I have been mentioning that fresh private capex has well and truly started. One could argue that it should be much stronger than what it is today but it is fair to say that the private capex cycle has started.”

On Thursday, shares of the bank fell 0.76% to close at 881.05 on the BSE.

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