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"Technical Impact": Axis Bank’s Accounting Innovation in Q1 FY26
Gross Slippages: Rs. 8,200 cr
Technical Impact: (-) Rs. 2,709 cr
EXCLUDING Technical Impact = Rs. 5,491 cr
So, NPAs & PAT are reported as: “Actual” vs. “Ex Technical Impact”
What is “Technical Impact”?
Axis Bank says that its fresh slippages jumped 71% QoQ, which was partly due to “technical impact”.
Definition of “Technical Impact”: Provided in the footnotes of Slide # 44 of the Investor Presentation.
The Definition Essentially Says:
We prudently applied all the accounting rules and principles to identify fresh slippages (loans at risk of not being paid.)
If we hadn’t applied all the rules so prudently, our reported slippages would have been lower.
[See actual definition in the attached screenshot.]
In this sense, Axis Bank has set a new standard of accounting for all Indian companies going forward:
You may now report your quarterly results with two sets of figures:
1. Actual Net Profit
2. Net Profit Ex Technical Impact
And define “Technical Impact” in the footnotes as:
“We used prudent accounting principles, so our net profit is lower. If we had done loose accounting, our net profit would have been higher.”
Thank you for your attention to this matter!
@arabicatrader
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The recent decline was a fall in stocks that was not accompanies completely by the index, mainly Nifty. This reminds us that this is a market of stocks and not just a stock market. But the sheer failure of the main index to participate also tells us that the markets distribution phase is going to be long and painful. This is slow poison and not the one sided stock market decline that we got used to at the peak of 2000 and 2008. To a large extent, the expansion of the options markets has played a role in this outcome. Directional bets in large caps and Nifty get closed out occasionally, reducing market volatility risk that came earlier from the futures market or the badla [old futures] system. This is even as the futures open interest on a relative basis is as big as it was at the top of 2008. Either that or it's just the sheer global liquidity created by central banks. Either way, it looks more like a slow grind lower now than anything fast. This will continue to fuel the buy-the-dip mentality that has now become engraved in the thinking of traders and investors even as markets and valuations lose ground.
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Daily Wrap-up: The Nifty index inched higher in today’s trading session and closed around the 61.8% retracement level of the recent decline at 21357. On the weekly chart, the Nifty index has given a negative weekly close after seven consecutive positive weekly close. A short-term top formation is possible if the Nifty index fails to close above 21593 in the forthcoming trading sessions. A break below the swing low of 20976 will confirm the lower top lower bottom structure. The Nifty index is at a crucial juncture, and it would be interesting to see who wins the battle, the bulls or the bears.
🐂 Bulls vs. 🐻 Bears: Who will dominate the Nifty index?
The Shanghai composite is about to break its shelf support. The China A50 index already has. So is this peak bearishness? Or the start of something worse to come? China can be the black swan that nobody is looking for if this happens. Too close for comfort.
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Heavy rains have caused waterlogging in Chennai's Pallikaranai
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