Informist, Thursday, Jul. 17, 2025

MUMBAI/NEW DELHI – With Axis Bank's net profit for the quarter ended June being marred by huge provisions, its senior management said agriculture loan and unsecured loan segment added to the lender's fresh slippages. Fresh slippages of the bank in the reporting quarter surged to INR 82 billion from INR 48.05 billion in the previous quarter.

The agriculture segment generally sees a spike in the Apr-Jun quarter due to the cyclical nature of its activity and tends to cool down in Jul-Sept, the bank's management said in a post-earnings media call. Deputy Managing Director Rajiv Anand said that the slippages in the agriculture segment in the reporting quarter accounted for 25% of the total slippages, while those in unsecured loan segment accounted for 75% of the total slippages. The bank does not see any stress in the secured segment, Anand said.

In Apr-Jun, Axis Bank's net profit fell 3.8% on year to INR 58.06 billion, while sequentially, the net profit saw a sharper decline of 18.4%. The bank's net profit was also lower than the analysts' estimate of INR 63.68 billion.

The bank's management said the higher slippages were due to technical re-adjustments. The bank's specific loan loss provisions were INR 39 billion in the June quarter. Axis Bank said INR 8.21 billion of provisions and contingencies were due to "technical impact". When asked more about the technical impact, the bank's senior management said, "We have not changed any days-past-due parameters because they are driven by regulation. NPA classification happens on days-past-due criteria, and then there is qualitative criteria, which is agnostic of days-past-due."

"If you've given a customer one-time settlement, do you follow these past-due criteria for generating the customer, or do you downgrade the customer as and when a one-time settlement is given?...The qualitative parameters, as we have previously indicated, we benchmark to most prudent in market on an annual basis. That benchmarking exercise happens for us in the period of February and March, and the implementation of that happens from the next fiscal. The purpose of the benchmarking is to make sure that our balance sheet is resilient and can withstand any credit cycle that comes our way, therefore giving you a robust, credible outcome when growth comes back."

The bank wrote off INR 27.78 billion in the June quarter, which is lower than the INR 33.75 billion in the previous quarter but higher than the INR 22.06 billion in the same quarter of last year. The net slippage ratio of the bank stood at 2.33% as of Jun. 30, and the gross slippage ratio was 3.13%. Axis Bank's gross non-performing assets ratio rose three basis points on year and 29 bps on quarter to 1.57% as on Jun. 30. The net non-performing assets ratio rose 11 bps on year and 12 bps on quarter to 0.45%.

The bank's upgrades and recoveries in the June quarter totalled INR 21.47 billion, down from INR 27.90 billion in the previous quarter, but up from INR 15.03 billion a year ago. Provisions and contingencies of Axis Bank increased by around 94% from a year ago and 190% from a quarter ago to INR 39.48 billion in Apr-Jun.

When asked about the sharp fall in net interest margin, the bank's senior management said they are confident of delivering 3.80% on a true cycle basis. "The current quarter has shown the full impact of 25 basis points and part of the quarter impact for 75 basis points. This 75 basis points rate cut impact will fully play through in the next quarter," the bank's management said. "That's directly how you should be thinking about our margins." The bank's net interest margin was 3.80% in the June quarter, down from 3.97% in the March quarter.

On the National Stock Exchange, shares of Axis Bank ended flat at INR 1,159.80 on the National Stock Exchange. The bank detailed its results after market hours Thursday. End

Reported by Siddhi Chauhan and Krity Ambey

Edited by Vandana Hingorani

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