Axis Bank’s non-performing loans on the retail side have seen a sharp spurt while net profit plunged 36% to Rs 1,117 crore in the fiscal third quarter ended 31 December 2020, compared to Rs 1,757 crore a year ago.

Retail assets accounted for 83% of the fresh slippages, causing concern among analysts as this segment had been a thrust area for the bank in the last few years. The stressed areas were unsecured loans, self-employed segment and mortgages.

The bank’s fresh slippages during the quarter under review stood at Rs 6,736 crore under the IRAC (income recognition and asset classification) norms versus Rs 6,214 crore a year ago. This had fallen to Rs 1,572 crore a quarter ago.

Slippages from the loan book per IRAC norms stood at Rs 6,499 crore and from investment exposures at Rs 236 crore.

Gross NPAs (as a percentage of gross advances) declined 74 bps sequentially to 3.44% in Q3FY21, which was less than 4.18% a quarter ago and 5% in the year-ago quarter. Net NPA dropped 24 bps QoQ to 0.74% in same period.

If the bank had classified certain borrower accounts as NPA after 31 August, the bank’s gross NPA would have been 4.55%, Axis Bank said. Net NPA ratio would have been 1.19%.

The bank’s net profit was adversely impacted to the extent of around Rs 1,050 crore on account of prudent expenses and provisioning charges during the quarter.

Provisions and contingencies stood at Rs 4,604.28 crore in the December quarter, up 32.7% compared to corresponding period and half a percent over previous quarter.

Specific loan loss provisions for Q3FY21 were Rs 1,053 crore, compared to Rs 2,962 crore a year ago. Axis Bank said that it has made provisions on 90+ DPD (days past dues) accounts not classified as NPA, pursuant to the Supreme Court judgment, at rates that would have applied to these accounts per extant provisioning rules for NPA in the banks, amounting to Rs 3,899 crore during the quarter.

The bank further said it held cumulative provisions (standard + additional other than NPA) of Rs 11,856 crore at the end of Q3FY21. "These cumulative provisions translated to a standard asset coverage of 2.08 percent as on December 2020."

As on December 2020, the bank's provision coverage as a proportion of gross NPAs stood at 79% from 77% a quarter ago.

Net interest income (NII) for the quarter rose 14% to Rs 7,373 crore from Rs 6,453 crore a year ago. Net interest margin (NIM) was up 3.59% compared with 3.57% in the year-ago quarter.

Deposits in Q3FY21 increased 11% to Rs 6.54 lakh crore compared with the year-ago period. Low-cost current account savings account (CASA) comprised 42% of the deposit mix, rising by 232 basis points YoY.

The restructured loans in Q3 stood at Rs 2,709 crore, or 0.42% of the gross customer assets.