The bank’s pre-tax profit stood at Rs 1,423 crore as opposed to Rs 782 crore in Q4FY19, while net profit was Rs 1,221 crore against Rs 969 crore. Analysts polled by Bloomberg had estimated a net profit of Rs 3,510 crore. However, excluding coronavirus-related provisions, the bank’s profit after tax would have been Rs 3,260 crore.
The bank has created higher than the required provisions toward coronavirus, at Rs 2,725 crore, which is well above the regulatory requirement of Rs 600 crore. On the upside, operating performance remains strong, supported by robust net interest income (NII) at 17 per cent year on year, despite higher tax refunds in 4QFY19. Net interest margin stood at 3.87 per cent in Q4FY20 compared to 3.77 per cent in Q3FY20 and 3.72 per cent in Q4FY19.
On the asset quality front, slippages remained elevated, led by one healthcare and one oil trading account, although higher writeoffs have led to GNPA improvement.
Gross non-performing assets (NPAs) declined to 5.53 per cent in Q4FY20 from 6.70 per cent in Q4FY19 and 5.95 per cent in Q3FY20. Similarly, net NPAs declined to 1.41 per cent in the reporting quarter from 2.06 per cent in Q4FY19 and 1.49 per cent in Q3FY20. The bank reported slippages of Rs 5,300 crore, higher than Q3FY20’s figure of Rs 4,300 crore.
Motilal Oswal Securities expect loan growth to moderate given the weak macro environment, weighed by Covid-19 outbreak. The 'BB and below' rated pool of assets is likely to increase, while a high share of loans under moratorium would result in elevated slippages over FY21E. Around 32 per cent of the bank's borrowers have opted for moratorium provided by the Reserve Bank of India (RBI).
"As a prudent measure, the bank has made additional provisions of Rs 2,720 crore toward Covid-19-related stress. Furthermore, lower exposure to the SME segment (3.5 per cent of loans) and high granularity in the BB and below book provides some comfort," the brokerage firm said results update.