Axis Bank Expect Gross NPA not to exceed 120-140 basis points

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Axis Bank held its conference call on 21st April 2009 to discuss on the company’s performance for full year ended March 2009.

Highlights

  • Axis bank registered 25% y-o-y growth in Q4FY09 in its Net Interest Income of Rs 1032.60 crore as against Rs 828.43 crore in Q4FY08 of the preceding year. With the other income increasing by 52% to Rs 845.51 crore, the operating profit registered 58% growth at Rs 1138.50 crore. However 55% increase in provisions and contingencies at Rs 255.19 crore restricted the growth of Net profit to 61% to Rs 581.45 crore for the quarter under review.
  • The Bank’s balance sheet size has grown by 35% to Rs 147722 crore as on March’09 with the deposits growing by 34% to Rs 117374 crore and net advances growing by 37% to Rs 81557 crore for the period.
  • Credit to deposit ratio stood at 69.48% as on March’09.
  • Bulk deposit constitutes 43% of the total deposit at Rs 66730 crore. The bulk deposit has grown by 40% on y-o-y basis. The cost of deposit in this category has come down from 11% during Q3FY09 to 8% (1 year tenure) on Q4FY09.
  • Savings Bank deposits registered a growth of 29% y-o-y, from Rs 19,982 crore as at end March’08 to Rs. 25,822 crore as at end March’09. The daily average Saving Bank balances over the year grew by 42% y-o-y. Current Account deposits grew by 24% y-o-y, from Rs. 20,045 crore as at end March’08 to Rs. 24,822 crore as at end March’09. The daily average Current Account balances over the year grew by 24% y-o-y.
  • The share of low cost deposits – Savings Bank and Current Accounts was 43% as at end March’09 as compared to 46% as at end March’08 and 38% as at end December’08.
  • The split up of loan book of Rs 81557 crore remains – large and mid corporate loans which constitute 50% of the total loan book grew by 42%, SME constituted 20% of the total loan book and grew by 39%, agricultural loans grew by 49% and constituted 10% of the portfolio while, retail grew by 18% and constituted 20% of the portfolio. Out of the retail mortgage and housing loan forms almost 65% of the total retail portfolio, 14% auto loan and remaining 12% constitutes personal loan.
  • The Net Interest Margin for Q4FY09 decreased to 3.37% from 3.93% in Q4FY08; however it increased from 3.12% in Q3FY08.
  • The daily average cost of funds was 6.64% in Q4FY09, 27 basis points lower than that in Q3FY09 (6.91%), but higher than 5.82% in Q4FY08 of the preceding year.
  • Yield on advances stood at 11% on Q4FY09 compared to 11.28% on Q3FY09. Cost of deposit declined to 6.86% during the quarter from 6.94% during Q3FY09.
  • The NPAs in value terms witnessed a rise during the quarter under review. The gross NPA increased by 82% to Rs 897.77 crore and Net NPA increased by 32% to Rs 327.13 crore. The gross addition during the quarter was Rs 110 crore excluding write off of Rs 60 crore.
  • The provision coverage stands at 56.60%. The provisions held together with accumulated write-offs, as a proportion of Gross NPAs and accumulated write-offs, amount to 85.31% at end March’09. If the accumulated write-offs are excluded, then the provisions held as a proportion of Gross NPAs amount to 63.56% as at end March’09.
  • The Gross NPA as a proportion of Gross Customer Assets was at 0.96% as at end March’09, up from 0.72% a year ago and 0.90% at the end of December’08.
  • The Net NPA as proportion to Net Customer Assets declined to 0.35% compared to 0.36% in the corresponding previous year however, it declined on q-o-q basis from 0.39% on December’08.
  • The Bank has a wide presence through its 835 Branches & Extension Counters and 3,595 ATMs across 515 cities and towns. During the year the Bank added 164 Branches & Extension Counters and 831 ATMs. During Q4 it added 86 Branches and 424 ATMs.
  • The Net Worth of the Bank was Rs. 9,757 crore as at end March’09 as compared to Rs. 8,449 crore a year earlier, a growth of 15% y-o-y. The Book value of the bank stands at Rs 271.8 per share compared to Rs 235.3 per share a year ago.
  • Its Capital Adequacy Ratio declined to 13.69% compared to 13.73% a year ago and 13.84% during December’08 quarter. The Tier – I capital amounted to 9.26% as at end March’09 as against 10.17% as at end March’08.
  • The Board of Directors of the Bank at its meeting held on April 20, 2009, inter alia, has recommended a dividend of Rs 10.00 per share (100%) for the year ended March 31, 2009 (previous year Rs 6.00 per share (60%), subject to the approval of the members at the ensuing Annual General Meeting.
  • The bank has granted Rs 2.60 million ESOPS during the year.
  • The book value of the Bank’s investment portfolio as of 31st March 2009 was Rs. 46,330 crore. 56.90% of the total investment remains in HTM (5 years duration), 42.35% in AFS (3.7 years) and 0.75% in HFT (6.6 years).
  • Of the total investment, Rs. 27,723 crore was in government securities while Rs. 18,607 crore was in other investments including corporate bonds, equities, preference shares, mutual funds etc. 87% of the government securities have been classified in the Bank’s HTM category while 98% of the corporate bond portfolio has been classified in the HFT and AFS categories.
  • For the quarter the yield on investment stood at 7.94% (7.92% in Q3FY09), the yields on G sec stood at 7.42% (7.44% in Q3FY09) and the yield on other investments stood at 8.86% (9.07% in Q3FY09).
  • The Bank has a wide presence through its 835 Branches & Extension Counters and 3,595 ATMs across 515 cities and towns. During the year the Bank added 164 Branches & Extension Counters and 831 ATMs. During Q4 it added 86 Branches and 424 ATMs. The bank has planned to seek license to add 200 branches and 800 ATMs more in the forthcoming year.
  • During the year, the Bank restructured loans aggregating to Rs. 996.17 crore, taking the cumulative total of loans restructured till 31st March 2009 to Rs. 1,625.87 crore (of which Rs. 22.06 crore comprise loans restructured a second time, in terms of the Reserve Bank of India dispensation). This constitutes 1.74% of gross customer assets (GCA), as compared to 1.11% at the end of December 2008 and 0.92% at the end of March 2008.
  • The bank has received Rs 451 crore applications for restructure of assets for the coming quarter. None are NPAs but standard assets; this will take the cumulative figure of restructured assets to Rs 2000 crore.
  • All the restructured loans are Standard assets and no provisions have been made till date. Further of the restructured loans, 14% are from Textile sectors, 14% are from Auto and auto ancillary sector, 10% from retail and real estate, 10% from Agriculture sector and around 42% comes for the residual sector which comprises of construction, jems and jewellary, food processing, poultry farming, mining sector etc.
  • The bank has received Rs 451 crore applications to restructure assets for the coming quarter. None are NPAs but standard assets; this will take the cumulative figure of restructured assets to Rs 2000 crore.
  • Though the outlook for FY’10 remains uncertain, the management of Axis bank is confident of growth of around 25% in advances. The management also indicated that conservatively, they expect Gross NPA not to exceed 120-140 basis points and Net NPA to be below 100 basis points.

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