Jan 17 Reuters Shares of Axis Bank fell to a 14month low on Friday, a day after the lender missed profit estimates on slower loan growth, higher bad loan provisions, and forecast that retail asset quality would take a few more quarters to normalise.

Axis Bank was the first major Indian bank to report its results in an industry grappling with rising bad loans, particularly in sectors such as microfinance and the unsecured portfolio. This has led lenders to allocate more funds for potential losses.

The 5.4 drop in Axis Bank39;s shares placed them at the bottom of the bluechip Nifty 50 on Friday, and dragged the Nifty Bank index lower by 1.3. The bank calibrated loan growth due to the stress in certain segments, Executive Director Subrat Mohanty said on Thursday, while finance chief Puneet Sharma noted that most provisions, which more than doubled in the third quarter, stemmed from slippages in the unsecured retail portfolio.

Axis Bank39;s thirdquarter profit missed analysts39; expectations due to rising credit costs and slowing loan growth.

Loans grew 9 yearonyear, slower than the 11 increase in the previous quarter.

The bank39;s asset quality deteriorated, with slippages loans classified as bad for the first time rising.

Normalisation of retail asset quality is underway and will take a few quarters to stabilise, CEO Amitabh Chaudhry said. Analysts at Goldman Sachs said the bank39;s asset quality cycle is yet to peak, which could lead to higher slippages.

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