Axis Bank Q1 Profit Declines Sharply
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Axis bank (Formerly know at UTI bank) Q1 profit declines. It is one of the few private banks to have begun their operations in 1994, With India’s 3rd largest private sector lender it offers financial services for personal and corporate banking.
Bank’s segment includes:
- Treasury- Investment in sovereign and corporate debt, equity and mutual fund, trading operations, derivate trading, and foreign exchange operations on the proprietary account
- Retail Banking- Small businesses, card services, internet banking, financial advisory service among others
- Corporate/Wholesale Banking- corporate advisory services, capital market service and cash management services
- Other Banking business- Third-party product distribution
Axis bank in Q1:
- Market Cap: ~ ₹125,918.7 Cr
- Revenue: ₹19,125 Cr
- Net profit: ₹1,112 Cr, 19% YoY fall
- Net Interest income: grew by 20% YoY to ₹ 6,986 Cr
- Gross NPA: 4.72% vs 5.25% (YoY)
- Net NPA: 1.23% vs 2.04% (YoY)
- Operating Profit: ₹ 5,844 Cr
- Provisions and contingencies increased by 15.78% YoY to ₹4,416 Cr, due to COVID-19, which could be one of the reasons for the decrease in Net Profit.
After making additional provisions of ₹5,983 Cr towards contingencies in Q4FY20, it further made incremental provision of ₹733 Cr in Q1FY21 towards COVID-1. Provision cover has risen to 75% from 69% QoQ
Amitabh Chaudhry, MD&CEO, Axis Bank said, “The disruption caused by the pandemic has led to immense economic and social impediments, however, it has also brought about innovations across the industry.
Highest Revenue is generated from the Retail banking segment which grew by 8.19% YoY in Q1FY21 to ₹15,440 Cr. Corporate banking and Other banking business showed degrowth whereas the Treasury segment also grew by 8.59% YoY to ₹5,468 Cr.
Balance Sheet grew by 16% YoY and stood at ₹8,91,138 Cr for Q1FY21. Also, Total deposits grew by a 16.17% YoY period-end basis.
Axis Bank in mobile banking space remains amongst the top players with a market share of 19% in the UPI ecosystem, with its banking transaction volumes in Q1 growing by 175% YoY.
The contribution of Digital channels towards the business growth continues to rise steadily; 75% of FDs, 48% of new mutual fund SIPs, and 65% of personal loan disbursements in Q1 were through digital channels.
As of the end of June 2020, Bank’s wealth management business has an AUM of ₹155, 571Cr which is amongst the largest in India.
In Dec’19, Burgundy private was launched for the high and ultra-high net worth clients which has covered 986 families with assets of ₹19,018 Cr as at June’30 2020The outstanding moratorium came down to 9.7% from about 25% which was reported after annual results.
70%-80% customers under moratorium have serviced their loans in June. Axis bank has been successful in bringing its operating cost to assets to its targeted level of 2%. Axis Bank had raised ₹ 12,500 Cr via QIP in Sept 2019 and has a CAR of 17.29%. With Business parameters trending well, a moratorium in sync, and Non-interest income declining in Q1 by 33%, and Axis Bank be beneficial for investors in long term?
