Axis Bank Q1 Flags Rise In NPAs; Stock Falls 6%
The lender reports a sequential increase in gross NPAs of 11 basis points to 1.54 per cent and a sequential increase in net NPAs of 3 basis points to 0.34 per cent in Q1
The stocks of Axis Bank dropped heavily in the Thursday trading session after the private lender reported first quarter (Q1) corporate earnings which flagged concerns of rising non-performing assets (NPAs).
Axis Bank stock traded plunged 6.2 per cent to Rs 1,162 in the morning session on the National Stock Exchange (NSE).
The lender declared a substantial increase in net profit, with Rs 6,035 crore for Q1 FY25 compared to Rs 3,452 crore in the same period last year. Despite the fact that the net profit beat the street's forecast of Rs 5,797 crore, investors were more concerned about the increase in NPAs.
The lender reported a sequential increase in gross NPAs of 11 basis points to 1.54 per cent and a sequential increase in net NPAs of 3 basis points to 0.34 per cent in Q1.
During a press conference following the company's results, Puneet Sharma, CFO, said that the first quarter's seasonality in the retail agribusiness was the reason for the strain on asset quality.
In Q1FY25, the lender's net credit cost increased by 47 basis points (bps) year over year to 0.97 per cent. Expenses incurred by a lender as a result of loan default or anticipated default are referred to as credit charges.
The management reported that reduced recoveries and upgrades in the corporate loan portfolio accounted for about 55 per cent of the rise in credit expenses. They anticipate these recoveries in due course, but the exact timeframe may vary by one or two quarters.
Axis Bank stock emerged as the biggest laggard in the benchmark index Nifty 50 which traded 0.37 per cent lower. Nifty Bank also fell more than 1 per cent in the morning session.
In the 2024 so far Axis Bank delivered nearly 6 per cent returns against the 5.3 per cent rise in Nifty Bank year-to-date (YTD).
