Axis Bank appoints Puneet Sharma as CFO, to take charge from March 6

Axis Bank on Thursday said its board has approved appointment of Puneet Sharma as Chief Financial Officer (CFO).

His appointment will be effective from March 6, the private sector lender said in a regulatory filing.

Sharma replaces Jairam Sridharan, who has resigned as the group executive and CFO of the bank, with effect from the close of business hours on March 5, it said.

Prior to joining Axis Bank, Sharma spent 12 years at Tata Capital as a senior management functionary and was the group CFO since 2014 accountable for financial control, financial planning & accounting and taxation amongst other deliverables, the statement said.

Soon, you will be charged even for failed transactions at Axis Bank ATMs

Private lender Axis Bank is set to extend the ATM transaction failure charge to its own ATMs from 1 April 2020. The proposed fee for failures due to insufficient funds is Rs 25 per transaction.

The announcement is among four charges proposed by the bank in a notice titled ‘Introduction of Fee on Negative behaviour' and uploaded on its website.

Axis Bank customers received a text message from the bank informing them of the proposed changes. The text read: "Attention! Fees and charges applicable on your Savings/Salary Account have been changed; to know more about the new fee structure, click here bit.ly/2SIHmPW".

The notice also states that there will be an increase in transaction failure fee for accounts not maintaining balance.

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The bank is set to further introduce ‘fair usage fees on branch transactions’.

“It is proposed to introduce Fair usage fees for branch transactions which include branch cash, outward clearing, fund transfer, RTGS/NEFT & Remittances,” the note reads.

The proposal is to have 15 transactions free per month, and a charge of Rs 75 per transaction would be levied from the 16th transaction onwards. This will be over and above the existing fee structure.

The cheque book rate structure is also set to be tweaked according to ‘market practice’. Axis Bank customers will now avail of one multicity cheque book per year, instead of one such book every quarter, which is the existing practice. Further, the price of cheque book is set to rise to Rs 100 for each book having 20 leaves, compared to the prevalent price of Rs 60. The price per cheque/leaf is set to increase to Rs 5 from Rs 3.

The bank has also proposed to rationalise its free cash transaction limits across schemes, bank note acceptor (BNA) convenience fees and fee structure for its ‘Easy & Equivalent Savings’ scheme.

Axis Bank plans to raise Rs 4,175 crore via NCDs on private placement basis

Private sector lender Axis Bank on Thursday said it plans to raise up to Rs 4,175 crore through the issuance of non-convertible debentures (NCDs) on a private placement basis.

"The committee of whole-time directors of the Bank, today approved the allotment of 41,750 senior unsecured redeemable non-convertible debentures of the face value of Rs 10 lakh each, for cash, at par aggregating to Rs 4,175 crore," Axis Bank said in a regulatory filing.

The coupon rate for the issue will be 7.65 per cent per annum, the filing added.

The said debentures rated 'AAA/Stable' by rating agencies CRISIL and ICRA, will be listed on the wholesale debt market segment of BSE and NSE, the filing said.

The shares of Axis Bank were trading at Rs 729.80 a piece on BSE, down 0.75 per cent from the previous close.

Axis Bank Q3 net profit misses Street estimates, up 5% YoY at Rs 1,757 cr

Private lender Axis Bank on Wednesday was back in the black during the December quarter of FY20, with its standalone net profit surging 4.52 per cent year-on-year (YoY) to come in at Rs 1,757 crore. The profit was Rs 1,680.9 crore in the corresponding quarter of the previous fiscal (Q3FY19). On a consolidated basis, the net profit was Rs1,884 crore.

The lender had reported a loss of Rs 112.1 crore in the September quarter of FY20 on account of one-time mark-down of deferred tax asset (DTA).

The number missed street estimates by huge margin.

Analysts at Prabhudas Lilladher foresee the bank’s net profit rising 61 per cent YoY, as against Rs 1,680.9 crore profit posted in Q3FY19, after adjusting complete mark-down of deferred tax asset (DTA) in the previous quarter. The bank had reported a loss of Rs 112.1 crore in the previous quarter of the current fiscal (Q2FY20).

Other brokerage firms, however, estimate the net profit rising between 16 per cent and 51 per cent. IDBI Capital, for instance, pegs the numbers at Rs 1,943.1 crore, up 15.6 per cent YoY while those at IndiaNivesh estimate a 45 per cent YoY rise at Rs 2,438.7 crore. Analysts at ICICI Securities, meanwhile, estimate the number at Rs 2,534 crore, up 51 per cent YoY.

It’s standalone net interest income – the difference between the interest earned and expended – stood at Rs 6,452.98 crore, a jump of 15.15 per cent YoY, over an NII of Rs 5,603.7 crore clocked in Q3FY19. Sequentially, the number was higher by 5.75 per cent over Rs 6,101.8 crore (Q2FY20). The net interest margin came in at 3.57 per cent.

“Operating profit for Q3FY20 stood at Rs 5,743 crores. Adjusted for a previously disclosed one-off recovery of Rs 800 crore in Q3FY19, Operating Profit grew 22 per cent YOY,” said the management in a statement.

ASSET QUALITY WORSENS

On the asset quality front, the Mumbai-based bank reported gross non-performing assets (GNPA) at Rs 30,073 crore for the recently concluded quarter. This was 3.4 per cent higher from the GNPAs reported in the previous quarter at Rs 29,071.39 crore. In Q3FY19, the GNPA stood at Rs 30,854.67 crore.

The net NPA, meanwhile, came in at Rs 12,160 crore, up 9.1 per cent QoQ. The amount was Rs 11,138.30 crore in the December quarter of FY19.

In terms of ratio, the GNPA ratio stood at 5 per cent, as against 5.03 per cent reported in Q2FY20, and 5.75 per cent in Q3FY19. The NNPA ratio came in at 2.09 per cent.

As for slippages from the loan book, they came in at Rs 5,124 crores. In addition, slippages from the Investment book were at Rs 1,090 crores, largely from one Housing Finance Company account, the bank said.

"Gross corporate slippages for the quarter (including investment portfolio) stood at Rs 3,891 crores, of which 81 per cent came from clients previously rated BB and below. Outstanding BB & Below corporate loans declined by 18% QOQ to Rs 5,128 crores," it said in a statement.

It added: The Bank has recognized slippages of Rs 6,214 crores during Q3FY20 (up 24.7 per cent QoQ, and 65.88 per cent YoY), compared to Rs 4,983 crores in Q2FY20 and Rs 3,746 crores in Q3FY19. Slippages from the loan book were at Rs 5,124 crores and that from investment exposures stood at Rs 1,090 crores. Corporate slippages stood at Rs 3,891 crores.

For the quarter under review, the bank created provision of Rs 3,470.92 crore, down 1.34 per cent QoQ from Rs 3,518.4 crore (Q2FY20). On a YoY basis, the number was 13.63 per cent higher from Rs 3,054.5 crore logged in Q3FY19.

The number missed Street’s expectations which were anticipating a decline in provisions by over 8 per cent YoY. Analysts at Prabhudas Lilladher, for instance, had pegged the provision at Rs 2,800 crore.

"Specific Loan Loss Provisions for Q3FY20 were Rs 2,962 crores, compared to Rs 3,352 crores in Q3 last year and Rs 2,701 crores in Q2FY20. Including provisions for standard assets and other provisions, total provisions were Rs 3,471 crores," it said.

LOAN BOOK

The bank's loan book for the quarter ended December 31, 2019 grew by almost Rs 28,500 crores sequentially. Of this domestic loan growth stood at 18 per cent YoY. Among this, retail loan book grew 25 per cent YoY, and domestic corporate book grew 16 per cent YoY.

According to the management, total deposits jumped 21 per cent YoY (quarterly average basis). While Savings Accounts grew 12 per cent (quarterly average basis), Current Account-Savings Account (CASA) and Retail Term Deposits (RTD) together were up 21 per cent YoY on QAB basis. CASA ratio stood at 40 per cent on QAB basis.

Shares of Axis Bank hit a high of Rs 722.6 apiece on the BSE in the intra-day trade today. At close, the stock was 1.08 per cent lower at Rs 710. In comparison, the benchmark S&P BSE Sensex settled 209 points, or 0.5 per cent lower at 41,115 level.

During the quarter under review, the counter has outperformed the benchmark S&P BSE Sensex by surging 10.12 per cent, as against a 6.6 per cent gain in the index.

Axis Bank Q2 results preview: Here's what leading brokerages expect

Subdued loan growth and flat net interest margin (NIM) could dull the September quarter earnings of Axis Bank, which is slated to report its September quarter earnings for the financial year 2019-20 (Q2FY20) this week.

Analysts, however, seem to be divided on the growth in net profit due to ambiguity over whether the bank would provide a one-time mark-down in its deferred tax asset (DTA) or would the mark-down be spread evenly over the financial year.

Consider this: Analysts at Nirmal Bang peg the PAT at Rs 2,186 crore, up 177 per cent year-on-year (YoY) if the mark-down is evenly spread in FY20. The profit, however, reduces to just Rs 49.5 crore, down 930 per cent, if the DTA is marked down in Q2.

In the June quarter of FY20, the private lender reported a PAT of Rs 1,370.1 crore. The same was Rs 789,6 crore in the September quarter of the previous fiscal. The net interest income (NII) came in at Rs 5,843.7 crore in Q1FY20, and was Rs 5,232 crore in Q2FY19. The private lender reported a revenue of Rs 9,712.4 crore in the previous quarter of the current fiscal.

So far in 2019, the bank has outperformed the benchmark indices at the bourses. The stock of the bank has advanced 15 per cent, as against an 8 per cent rise in the S&P BSE Sensex and S&P BSE Bankex.

Here is what brokerages expect from the July-Sept quarter earnings:

Edelweiss Securities

The brokerage expects the one-time DTA mark-down to hit earnings in the September quarter. It estimates the PAT to come in at Rs 162.4 crore, down 88 per cent sequentially.

“Incremental stress pool addition would be the key monitorable to assess the asset quality (in Q2),” their analysts wrote in an earnings preview note, adding, “Given it has created contingency buffer in Q1FY20, provisioning will lower QoQ”.

Prabhudas Lilladher

Assuming an evenly marking-down of DTA, analysts at Prabhudas Lilladher expect the private lender to report a PAT of Rs 1,578.3 crore, up 100 per cent YoY and 15 per cent QoQ.

The brokerage estimates provisions at Rs 3,043.3 crore for the quarter under review, up 4 per cent YoY, from Rs 2,927.4 reported in Q2FY19. Sequentially, provisions are likely to decline by 20 per cent from Rs 3,814.6 crore reported in Q1FY20.

"The credit cost could be at 2.35 per cent as the bank may look to enhance the provision coverage ratio (PCR). Furthermore, the bank could utilise the fresh capital of Rs 13,000 crore as a cushion against higher provisions," the brokerage noted.

ICICI Securities

ICICI Securities expect the growth in retail and micro, small and medium enterprises’ (MSME’s) credit book to support a nearly 16 per cent rise in NII.

“The bank's advances traction is expected at 15 per cent YoY to Rs 5.24 lakh crore largely led by retail and MSME segment. Margins are estimated at 3.44 per cent, which would lead to NII growth of 15.7 per cent YoY to Rs 6,052 crore,” they noted in the quarterly preview report.

The analysts, however, would watch out for the management’s commentary on “the stressed asset cropped up recently and delay or failure for resolution in the near term which could endure higher provisions in coming quarter”.

The gross non-performing assets (GNPA) are pegged at Rs 27,053 crore, while net NPAs (NNPA) are estimated at Rs 10,706 crore.

Elara Capital

Analysts at Elara Capital estimate a fall in the bank’s revenue on sequential terms, but see a 15 per cent growth YoY.

The same is pegged at Rs 9,073.7 crore, down 6.6 per cent, from Rs 9,712.4 crore reported in the previous quarter of the current fiscal; but up 14.7 per cent from Rs 7,910.5 crore logged in Q2FY19.

Emkay Global Financial Services

For the recently concluded quarter, Emkay Global expects the NIM to remain flat at 3.4 per cent, largely due to minimal loan growth.

The brokerage, however, warns of fresh slippages from Cox & Kings (Rs 2.1 billion), Mcloed Russel (Rs 4 billion), and ADAG NBFC (Rs 6 billion).

Axis Bank raises Rs 12,500 crore via QIP to enhance capital adequacy

Private lender Axis Bank on Thursday announced the opening of its qualified institutions placement (QIP) last week to raise funds to enhance its capital adequacy for its growth strategy and general corporate purposes.

The QIP was approved by bank shareholders through a postal ballot on August 21. "We understand that the transaction is the largest ever QIP by a private sector issuer in India," the bank said in a statement.

"Despite a challenging macro-economic and market environment, the placement has witnessed strong reception from the global and domestic investor community. The deal was oversubscribed with the aggregate final transaction size being Rs 12,500 crore."

The QIP issuance was done at a price of Rs 629 per equity share at a tight discount of 1.44 per cent over the closing price of the issue opening date, that is September 19. The QIP issuance price of Rs 629 per equity share is at a discount of 4.91 per cent to the floor price of Rs 661.50 per equity share, determined as per the SEBI formula.

The transaction was anchored by several large marquee foreign portfolio investors, domestic mutual funds and insurance companies.

"The reception for the QIP is an endorsement of Axis Bank and its strong fundamentals," said Managing Director and CEO Amitabh Chaudhry. "We are excited about the opportunities that will be created through this capital raise."

Axis Bank is the third-largest private sector bank in India. It offers a vast spectrum of services to customer segments covering large and mid-corporates, small and medium enterprises, agriculture and retail businesses.

With 4,094 domestic branches (including extension counters) and 11,950 ATMs, the bank's network is spread across 2,380 cities and towns. It also has 10 ten overseas offices.

Axis Bank fixes floor price for QIP issue at Rs 661.50 per equity share

Private lender Axis Bank on Thursday fixed the floor price for its qualified institutional placement (QIP) issue at at Rs 661.50 per equity share. The private lender has said that the board will meet again on September 25 to approve QIP issue to investors.

The bank, in an exchange filing, has also said that a discount of 5 per cent can be offered on the base price at the discretion of the board. While the issue size was not revealed, the bank’s board in July has approved a proposal to raise upto Rs 18,000 crore through issue of equity shares, depository receipts or convertible securities.

The bank’s scrip was down 1.5 per cent down at Rs 638.25 at the BSE.

Axis Bank back in black; reports Rs 1,505 crore net profit in Q4 | Business Standard News

Private lender Axis Bank on Thursday reported a net profit of Rs 1,505 crore for the March quarter, against a net loss of Rs 2,189 crore in the year-ago quarter, on healthy growth — both in interest income and other income as well as a steep fall in provisions over the previous year quarter.

Net interest income for the quarter, which is interest earned minus interest expended, increased 21 per cent to Rs 5,706 crore, from Rs 4,730 crore in the March 2018 quarter, the bank said.

Other income for the quarter ended March grew 26 per cent to Rs 3,526 crore, against Rs 2,789 crore during the same period last year.

Gross non-performing assets (NPAs), as a percentage of gross advances, came down to 5.26 per cent as of March 2019, from 5.75 per cent in December 2018 and 6.77 per cent in March 2018.

“We want to embed conservatism further into our policies. We will be implementing a formula-based provisioning process, with no room for subjectivity,” said Amitabh Chaudhry, managing director and chief executive officer, Axis Bank, in a media call.

Provisions and contingencies for the quarter stood at Rs 2,711 crore, a steep fall against Rs 7,179 crore in the year-ago quarter.

The bank has an exposure of Rs 700 crore to Infrastructure Leasing & Financial Services, of which Rs 300 crore is already classified as NPA.

The bank’s gross slippages during the quarter stood at Rs 3,000 crore, of which Rs 1,369 crore came from the corporate segment, while the rest came from the retail and small and medium enterprise (SME) segment.

Of the bank’s total slippages, a major chunk was from the pool of ‘BB’ and below-rated accounts (indicating higher risk of defaults). However, one engineering account with a higher credit rating turned bad, which the management said was ‘one-off’.

As of March 2019, the ‘BB’ and below corporate pool stood at 1.3 per cent of gross customer assets, the lowest in the last 12 quarters.

Ninety-five per cent of new loans in 2018-19 were from entities with credit rating of at least ‘A-’, indicating lower default probability, an improvement from 85 per cent in 2017-18, which is in line with the bank’s conservative lending policy under Chaudhry.

Though there could be some margin pressure, strong asset quality is key to banks such as Axis, which would also drive earnings, say analysts.

“The bank has continued its strong performance shown last quarter, with an overall asset quality improvement and higher provision coverage ratio. Also, deposits grew at a healthy pace, against intensifying competition. And high quality of new loans built a strong earnings outlook for Axis Bank,” said Lalitabh Srivastava, AVP-Research, Sharekhan. He added that there is room for further valuation upsides, provided the bank is able to maintain its performance trajectory along with pragmatic and sustainable incremental growth.

The bank’s total capital adequacy ratio stood at 15.84 per cent at the end of March 2019, against 16.57 per cent in March 2018.

The bank’s advances grew 13 per cent to Rs 4.94 trillion in March 2019, while retail loans were up 19 per cent and accounted for 50 per cent of the bank’s net advances, while SME and corporate loans increased 12 per cent and 5 per cent, respectively.

The bank’s stock closed at Rs 740.85, down by 1.56 per cent on the BSE from the previous close.

Axis Bank jumps 20% this year, analysts see more upside ahead. Here's why

Shares of private sector lender Axis Bank have surged over 20 per cent so far in the calendar year 2019. The market capitalisation of the bank has increased by over Rs 33,000 crore to Rs 1,94,281 crore during the same period. (as of March 20, 2019), data fetched from ACE Equity shows. Despite this outperformance, most brokerages are bullish on the bank's profitability and see more upside ahead.

The bank recently hosted an analyst day where the management reiterated its objective of delivering an 18 per cent return on equity (RoE). ROE is a measure of a company’s annual return i.e. net income divided by the value of its total shareholders’ equity. It is expressed as a percentage.

Here's a list of top five factors why most brokerages believe more steam is left in the stock's rally -

Structural changes: Axis Bank plans to make Product, Underwriting and Operations a separate function in both Wholesale and Retail business from 1st April, 2019. This will prevent any inherent conflict of interest and help maintain better asset quality trend across cycles, note analysts at Motilal Oswal Financial Services (MOFSL). The bank has recently hired a new compliance officer to bridge differences with the regulator.

The brokerage has maintained 'buy' rating on the stock with the Target Price of Rs 875.

Three pillars to drive ROE: Analysts at Edelweiss Securities believe the bank will build up its RoE to 18 per cent-plus on account of risk normalisation (reduction of credit cost below long-term average with no negative surprise), business mix optimisation, and improvement in operating efficiency (reduction in cost/assets to 2 per cent).

Asset quality seen improving: Axis’s asset quality has notably deteriorated over the past three years, which has dented its return ratios. The bank's net NPAs (funded) to net advances stood at 3.40 per cent, 2.11 per cent and 0.74 per cent at the end of March 2018, March 2017 and March 2016, respectively. Return on equity (ROE), which stood at 16.81 per cent in March 2016 declined sharply to 6.7 per cent at the end of March 2017 and 0.46 per cent in March 2018, ACE Equity data shows.

However, it is likely to improve going ahead owing to a paradigm shift in credit risk practices, decreasing proportion of the BB and below rated book, and better retail asset quality (versus peers), says Darpin Shah, an analyst at HDFC Securities. "We have factored in slippages of 3.6% over FY19-21E," Shah adds.

Focus on growth and profitability: The lender is focusing on increasing the scale of certain businesses substantially to reach in top tier categories which will help command profitability. Certain verticals like debt capital market (DCM), equity capital market (ECM), digital and cards/payments already on a leadership position and leveraging relationships has been a key area of mindshare, say analysts at Prabhudas Lilladher.

Going ahead, the bank would continue to focus on growing retail assets especially to high yielding segments (moved from 29 per cent to 37 per cent of retail in last 5 years), move share towards mid-corporate/commercial banking and do higher working capital to corporates.

Changes in credit culture: Addition of fresh talent is supported by a change in credit/risk practices. Credit/ risk heads now report to the MD (vs. business heads earlier). Further, they are no longer bound by net interest income (NII) and fee targets. HDFC Securities believes this will materially improve underwriting quality. The brokerage has maintained 'Buy' rating on the stock with a revised sum-of-the-parts valuation (SOTP) target price of Rs 894.