Private sector lender Axis Bank Ltd expects collections to slow in the coming weeks as covid infections continue to rise across India, affecting the movement of executives on the ground, its chief executive officer Amitabh Chaudhry said on Tuesday.
“These are early days, but we do see an immediate business impact across segments,” said Chaudhry.
He said that corporates are adopting a wait-and-watch strategy and given the sudden surge, the focus is on employee health and safety.
Axis Bank’s advances including targeted long-term repo operations (TLTRO) investments grew 12% year-on-year (y-o-y) to ₹6.41 trillion. Its deposits rose 10.5% y-o-y to ₹7.07 trillion.
India is in the midst of a raging pandemic that has returned with renewed vigour and is infecting people at an alarming rate. States such as Maharashtra and Delhi have announced restrictions on movement to curb the spread, but could end up hurting economic recovery, experts said.
The Reserve Bank of India (RBI) had recently warned in an article of inflationary pressures emanating from any delay in containing the spread of the coronavirus.
“We have not seen any slowdown in early bucket collections, but it is likely to get impacted in the coming weeks because people are not able to meet customers,” Chaudhry said, adding that despite challenges, such situations do provide opportunities and the bank would like to grow in its focus segments.
The bank reported a net profit of ₹2,677 crore in the three months to March 2021, compared with a loss of ₹1,388 crore in the same period last year. What changed this time round was the significantly lower provisions of ₹3,295 crore in the quarter. This, despite the fact that Axis Bank has changed its provisioning norms for small business loans, setting aside more than regulatory requirements. This contributed an additional ₹803 crore to provisions in the quarter.
“Our balance sheet is strong, and we have taken provisions upfront and have more than decent buffers built in,” said Chaudhry, speaking about the lender’s resilience to the second covid wave.
He added that the bank has a formalized and calibrated provisioning policy and depending upon how the portfolio across the franchise behaves, provisioning will automatically change.
“We don’t know how covid will play out. Depending on that, our provisioning policy will take care of it,” he said.
Meanwhile, the bank invoked debt recast of ₹1,848 crore under the RBI’s covid-19 relief circular. Of this, debt recast in loans of ₹623 crore has been implemented.
While Axis Bank has time till 30 June to complete the rest of it, the lender may or may not do it by then.
“The way we have disclosed our numbers is to provide you the maximum extent of restricting possible on our book,” said Puneet Sharma, chief financial officer, Axis Bank.
The bank reported gross slippages of ₹5,285 crore during the March quarter, versus ₹3,920 crore in the same period last year.
While slippages from the loan book were at ₹5,038 crore, that from investment exposures stood at ₹247 crore. The bank said that 64% of its slippages came from its retail loan book. Its write-offs outpaced loan recoveries in the March quarter. While recoveries and upgrades from non-performing assets were at ₹3,462 crore, write-offs were at ₹5,553 crore in the same period.
Shares of Axis Bank on BSE closed at ₹699.3 on Tuesday, down 0.16% from its previous close.