NPAs mar Axis show

Axis Bank on Tuesday reported a 36 per cent rise in net profit for the second quarter ended September 30.

By Our Special Correspondent in Mumbai
  • Published 18.10.17

Mumbai: Axis Bank on Tuesday reported a 36 per cent rise in net profit for the second quarter ended September 30.

However, a divergence with the RBI on the methodology of NPA computation, forced the bank to report higher bad assets.

Net profit of the country's third largest private sector lender stood at Rs 432 crore compared with Rs 319 crore a year ago.

Asset quality fell though the bank pointed out the size of stressed pool has been reducing steadily over the past six quarters. During the quarter, the lender's gross NPAs rose to Rs 27,402.32 crore compared with Rs 16,378.65 crore in the year-ago period and Rs 22,030.87 crore in the preceding three months.

Similarly, the percentage of gross NPAs jumped to 5.90 per cent from 5.03 per cent on a sequential basis and 4.17 per cent last year.

The divergence in methodology relates to NPAs for 2016-17. For the fourth quarter of the last fiscal, Axis Bank had classified advances into NPAs or performing assets following the extant RBI guidelines.

But following a risk based supervision (RBS) for the last fiscal, the RBI held a different view with regard to nine accounts of the bank.

Following the RBS exercise for 2016-17, which concluded this month, the RBI pointed out certain modifications in the bank's asset classification and provisioning as on March 31, 2017.

While gross NPAs as reported by the bank then stood at Rs 21,280.48 crore, the gross NPAs as assessed by the RBI stood at 26,913.28 crore, a divergence to the tune of Rs 5,633 crore. There was a divergence of around Rs 1,316 crore in provisioning, as well.

The bank decided to record the impact of these diversification in the quarter ended September 30. As on June 30, 2017, these 9 accounts were classified as standard assets across most consortium banks, with only 6 per cent of their outstanding classified as NPA. Axis Bank said that as on September 30, the fund-based outstanding on these 9 accounts was Rs 4,867 crore, all of which now stand as NPA.