BANKS
Axis Bank estimates potential stress of Rs 20,000 cr
Axis Bank has been improving its asset quality through series of write-offs and upgrades and recoveries. In the last one year, it has written off over Rs 9,448 crore worth of assets.
Axis Bank has been improving its asset quality through series of write-offs and upgrades and recoveries. In the last one year, it has written off over Rs 9,448 crore worth of assets.
Axis Bank estimates a potential stress of Rs 20,600 crore including its 'BB' and below-rated loans. The bank also estimates its potential restructuring to be at 3.6% of its loan book.
The likely restructuring could be about 1.6% of its loans, at Rs 9,000 crore.
Axis Bank holds comfortable provision cover at 2.2% of its net advances. Advances grew 11% to Rs 5,76,400 crore. The bank holds additional provisions of Rs 10,840 crore, which gives a 53% coverage of the potential stress.
The management states that this is only a probable list and the final picture will be clear at the end of the fiscal third quarter.
The bank has been improving its asset quality through a series of write-offs and upgrades and recoveries. In the last one year, the bank has written off over Rs 9,448 crore worth of assets (20-21 September). The bank also upgraded Rs 7,732 crore worth of accounts during this period.
"We created a probable list for restructuring and this could be about 1.6% of our total advances. But we have not restructured any loans in the second quarter," Axis Bank chief executive officer and managing director Amitabh Chaudhry told analysts in an earnings call.
Axis Bank indicated in its earnings presentation that Rs 2,500 crore from its retail and commercial banking group and another Rs 3,053 crore could go from its corporate assets which are rated 'BB' and below.
The top five sectors comprising infra construction, cement and cement products, hotels, power generation and distribution, and food processing account for 63% of fund based on the 'BB' and below book. The non-'BB' and below corporate probable fund-based restructuring book comprises 0.5% of gross advances.
Asset quality has remained stable, with the bank writing off bad loans, undertaking recoveries, and initiating a series of upgrades. During the quarter the bank wrote off Rs 1,812 crore of loans and upgraded Rs 1,848 crore of loans. The fresh slippages were lower than the preceding quarter at Rs 931 crore. Even after adding the standstill accounts in this, the total fresh slippages will come to just Rs 1,570 crore.
In the year-ago period, fresh slippages mainly from its corporate book stood at Rs 4,983 crore. In the preceding quarter, it was Rs 2,218 crore. The gross non-performing asset (NPA) of the bank was Rs 26,832 crore, improving both sequentially and from the year-ago period.
