Axis Bank posts $183 million loss as provisions nearly triple on COVID-19
Axis Bank Ltd, India’s third-biggest private-sector lender, on Tuesday posted a surprise fourth-quarter loss of 13.88 billion rupees ($182.96 million), as it set aside more funds to cover a potential rise in bad loans in a coronavirus-hit economy.
The pandemic has dealt a heavy blow to the economy, worsening problems at Indian banks that were already laden with tremendous amounts of bad loans due to their exposure to troubled sectors such as real estate, infrastructure, and shadow banking.
Mumbai-based Axis Bank booked provisions of 77.30 billion rupees for the quarter, or nearly three times higher than the year-ago period, including 30 billion rupees towards COVID-19.
Analysts had expected a profit of 15.56 billion rupees for the three months to March 31, according to Refinitiv data, compared to a reported profit of 15.05 billion rupees a year earlier.
Separately on Tuesday, Axis Bank said it would buy a 29% stake in insurer Max Life Insurance for about 15.90 billion rupees, giving the lender a seat among rival banks who already have a foothold in the country’s life insurance industry.
Axis Bank, which already holds a minority stake in Max Life, will buy shares from the insurer’s majority owner Max Financial Services Ltd to raise its stake to 30%, while Max Financial will hold a 70% stake in the joint venture partnership.
Axis shares closed up 6.6% after the deal announcement, in a broader Mumbai market that ended 1.06% higher.
Net interest income grew 19% to 68.08 billion rupees, while net interest margin rose to 3.55% from 3.44% last year.
Gross bad loans as a percentage of total loans, a measure of asset quality, eased to 4.86% in March-end from 5% in the previous quarter.