The private lender witnessed a 13.1% y-o-y rise in net interest income (NII) at Rs 5,844 crore. NII is the difference between interest earned and interest paid by a bank. The private lender’s shares fell 2.58% intraday, before settling at Rs 706.55 per share, down 1.82%.

Meanwhile, the bank’s asset quality witnessed little improvement sequentially, with gross non-performing assets (NPAs) almost steady at 5.25% of the loan book at the end of June while net NPAs stood at 2.04%.

The bank recognised gross slippages of Rs 4,798 crore for the quarter ended June, against Rs 3,012 crore in Q4FY19 and Rs 4,337 crores in Q1FY19. Of this, corporate slippages specifically, stood at Rs 2100 crore, the management said on a post earnings conference call.

Recoveries and upgrades from non-performing assets during the quarter stood at Rs 2,177 crore while write-off were at Rs 3,005 crore. Furthermore, the bank downgraded Rs 2,242 crore into the ‘BB’ pool for the quarter, “mostly from groups that have shown new signs of stress in recent months”.

In a post-earnings conference call, the bank management said these downgrades were related to specific stressed exposure to various groups with businesses related to media, housing finance and travel& tourism, among others, that have been in news.

After the action, the bank’s BB and below rated book stood at Rs 7,504 crore, or 1.3% of its gross customer assets, down from 7.3% at peak. During the quarter, the private lender also tweaked internal guidelines to continue increasing conservatism in its provisioning, introducing a process of making systematic provisions towards non-fund based facilities in NPA and in stressed accounts outside NPA.

“This change created a one-time provisioning impact of Rs 459 crore during the quarter,” the bank said in its earnings note.

“The bank has now made multiple interventions over the last few quarters to create additional provisions outside regular NPA provisions. As on June 30, the bank has additional provisions of Rs 2,358 crore towards various risk contingencies, over and above the regular NPA provisioning and the 0.4% standard assets provisioning requirement. These Rs 2,358 crore of provisions are not counted towards provision coverage ratio calculations of the Bank.”

The bank’s provision coverage ratio stood at 78% during the quarter, up from 77% in the March quarter.

Net interest margin (NIM) was fairly steady at 3.40% from the end of June. The management expects to continue maintaining stable margins with a slightly upward bias. Meanwhile, the bank’s non-interest income rose 32% y-o-y to Rs 3,869 crore against Rs 2,925 crore last year. Its advances rose 13% y-o-y to Rs 4,97,276 crore by the June end, of which retail advances grew 22% y-o-y, accounting for 52% of total advances. On a period-end basis, total deposits grew by 21% y-o-y.