For Axis Bank, investors’ focus has shifted from loan growth to asset quality in recent quarters. And rightly so, as exposure to troubled sectors has led to sharp rise in bad loans. After adding ₹8,772 crore to bad loans during the September quarter, the bank added a lower ₹4,560 crore in the December quarter. But the bad loan issue is far from bottoming out.
Axis Bank had created a watch list at the end of March 2016 of around ₹22,600 crore. The incremental stress from outside the watch list is now a cause for concern. In the September quarter, 89 per cent of corporate slippages came from the watch list. In the latest December quarter, of the ₹2,579 crore of corporate slippages, 30 per cent has come from outside the watchlist.
The bank’s loan growth also slipped to 10 per cent in the December quarter from 18 per cent in the September quarter.