Private sector lender Axis Bank reported a loss of Rs 2,189 cr for the Jan-Mar quarter, hit by costs that rose faster than revenues as well as higher provisions to account for eventualities.
For the quarter, the company’s interest income increased by Rs 603 cr on year, but the interest that it paid out on deposits and other products also increased by 601 cr, negating each other.
On the other hand, Axis Bank’s non-interest income fell by Rs 224 cr to Rs 2,789 cr.
Besides the fall in non-interest income, the bank also suffered from a sharp rise in its operating costs.
Operating expenses rose by Rs 480 cr to Rs 3,847 cr compared to last year.
Most of the increase came from ‘other operating expenses’.
As a result of the double whammy of lower non-interest income and higher operating expenses, Axis Bank’s operating profit fell by Rs 703 cr (16%) to Rs 3,672 cr.
Profits were further reduced due to a sharp increase in contingencies and provisions.
Provisions increased to Rs 7,180 cr from Rs 2,581 cr last year and Rs 2,811 cr in the preceding quarter.
As a result, the bank had a loss of Rs 3,507 cr at a pretax level, compared to a profit of Rs 1,793 a year earlier and Rs 1,043 in the preceding three months.
Thanks to a write back of Rs 1,319 cr of tax provisions, the company’s net loss was only Rs 2,189 cr, compared to a profit of Rs 1,225 cr last year and Rs 726 cr in the preceding quarter.
Losses were mostly concentrated in the company’s corporate banking division, which lends money to companies.
However, margins in other businesses were also on the decline.
Pretax profit at the retail banking business, for example, was at Rs 333 cr compared to Rs 863 cr last year and Rs 592 cr in the preceding quarter.
Treasury pretax profits fell to Rs 206 cr from Rs 368 cr last year and Rs 628 cr in the preceding quarter.