Axis Bank rises 5% despite weak Q4 results

Shares of Axis Bank were up 5% at Rs 522 per share on the market despite the private sector lender reporting its first net loss of Rs 21.8 billion for the quarter ended March 2018 (Q4FY18), as non-performing assets (NPAs) soared and provisions for bad loans surged three times over the corresponding quarter last year.
Most of the local brokerage houses maintain ‘buy’ or ‘accumulate’ rating on the Axis Bank on expectation of sustained return on assets (ROA) expansion over the next 24 months to drive a multiple expansion as asset quality distractions recede.

Axis Bank reported the loss was on account of accelerated stressed asset recognition, precipitated by new RBI guidelines on Resolution of Stressed Assets.

“The bank reported slippages of Rs 165 billion (18.1% of opening loans), leading to elevated income reversals and high loan loss provisions, thereby impacting profits. In FY19ii, Axis Bank plans to recognise residual stress in 1HFY19ii and then proceed to more normalised operations in 2HFY19ii. It also aims to revamp its corporate banking vertical. The accelerated stress recognition and high provisions, thereon, is a positive,” IIFL Institutional Equities said in result review.