Axis Bank share price surges over 6% after earnings reveal that only 9.7% of its loans are exposed to the moratorium

• Axis Bank’s share price is up by over 6% in early morning trade.
• The jump in stock value comes after the bank revealed that its moratorium book was only 9.7% of the total portfolio in terms of value.
• Axis Bank has also built up buffers to the tune of $900 million to address stressed assets and COVID-19 contingency.

Axis Bank’s share price rallied over 6% in early morning trade, reacting to its Q1 earnings posted last evening. The primary concern over asset quality was assuaged when the bank disclosed that only 9.7% total portfolio consisted of loans that had opted for the Reserve Bank of India’s (RBI) moratorium.


Analysts are now positive about Axis Bank’s growth and have increased their earnings estimates based on the bank’s strong net interest income (NII) growth and sequential decline in provisions.


90% of the customers who opted for the second moratorium are the same as the ones who opted for the first moratorium. Nonetheless, management said that Axis Bank remains cautious which is why it has a provision buffer of nearly $900 million and is building up a solid war chest.


In June, 80% of corporate clients and 70% of customers in retail who had opted for the moratorium successfully paid the interest on their loans. The bank’s Gross Non-Performing Assets (GNPA) ratio and Net Non-Performing Assets (NNPA) ratio has also improved over last quarter.


This has helped boost the provisions coverage ratio (PCR) to 75%, an increase of 576 basis points (bps) over the last quarters. A hundred bps make up 1%. “Post near term stress taking shape, we expect the book to normalize and improve thereon,” said IDBI Capital’s review.

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