India`s Axis Bank posts surprise quarterly profit drop on rise in bad loan provisions
Indian private lender Axis Bank reported a surprise drop in first-quarter profit on Thursday, weighed by higher provisions for bad loans and deteriorating asset quality.
The country's fourth-largest private lender by market capitalisation reported a standalone net profit of 58.06 billion rupees ($674.8 million) for the quarter ended June 30, compared with a profit of 60.35 billion rupees a year earlier.
Analysts, on average, had expected a profit of 63.73 billion rupees, as per data compiled by LSEG.
Net interest income, the difference between interest earned on loans and paid on deposits, rose a marginal 0.8% to 135.6 billion rupees, as per Reuters' calculations.
Provisions and contingencies, or funds kept aside for potential bad loans, doubled year-on-year to 39.48 billion rupees.
Indian lenders have been grappling with higher bad loans in segments such as microfinance and unsecured portfolio, forcing them to set aside more funds for potential bad loans and to strengthen their balance sheets.
Axis Bank's gross non-performing assets ratio, a key gauge of asset quality, deteriorated to 1.57% at the end of June, compared with 1.28% three months earlier.
($1 = 86.0460 Indian rupees)
