Wednesday, 26 October 2016

Axis Bank net profit slumps as bad loans Rise

Axis Bank Ltd on Tuesday reported an 83 percent fall in second-quarter net profit after a sharp rise in bad loans, providing more evidence of how India's banks are struggling to cope with a $138 billion distressed loan burden.

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The banks' record stressed assets are mainly due to corporate loan defaults. State-controlled banks account for the bulk of the troubled loans, while among the private sector banks, ICICI Bank and Axis Bank account for the biggest chunk.

Axis Bank said its bad loans jumped to 4.17 percent of total loans as of end-September from 2.54 percent in June. About 72.87 billion rupees of loans from the bank's previously announced "watch list" of troubled loans turned non-performing in the second quarter, finance chief Jairam Sridharan told a media conference call on Tuesday.

The bank will raise provisions in the second half of the fiscal year, keeping credit costs high for the fiscal year to March, he said. But he saw the current year as the "likely peak" for bad assets. The bank still has 137.89 billion rupees worth of loans in the "watch list".


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