Axis Bank conducted a concall on 24 April 2024 to discuss the financial results for the quarter ended March 2024 and prospects of the bank. Amitabh Chaudhry, MD&CEO of the bank addressed the call:

Highlights:

The bank has had another strong year of performance built on GPS strategy that has set Axis Bank firmly on the path to become a resilient all-weather franchise with investments made in building blocks across people, processes, technology, and several multiplicative projects over the past five years.

The bank has delivered aspirational return ratios with better quality and consistency of earnings, while maintaining a strong balance sheet position.

The bank has maintained the growth trajectory across focus business segments including MSME, Bharat and Retail Assets and improved the quality of deposit franchise.

The bank also scaled up the branch network as the bank crossed milestone of 5000 branches and opened record 475 branches in FY24.

In Q4FY24, the bank delivered consolidated ROE of 20.87% and has delivered ROEs of greater than 18% for the past 7 quarters.

The Bank is well capitalized with organic net accretion of 44 bps of CET -1 capital in FY24.

The bank stay focused on three core areas of execution of GPS strategy namely becoming a resilient, all-weather franchise, creating multiplicative forces to build competitive advantage and building for the future.

The bank continue to drive higher growth in LCR accretive (retail and small business) deposits that stood at 18% yoy, 500 bps higher than overall deposits growth. The bank is carrying this momentum into FY 25.

On premiumization strategy, Burgundy Private launched 4 years back now includes 35 of the Forbes 100 richest Indians as its clients and manages wealth for over 10,650 families across 27 cities pan country.

The higher yielding focus segments including SME, Mid Corporate, SBB, Rural, Personal Loan, Credit Cards together have grown at a CAGR of 25% in the last 4 years and now constitute 43% of the total advances, up by over 1,210 bps during this period.

The bank will continue to focus on driving growth across business segments while following capital efficient model.

The fee profile is among the best in the industry today with granular fee comprising 93% of overall fee, up 600 bps in last five years.

On the Merchant Acquiring Business, the bank moved from no 2 to leadership position during the year with terminal market share of 20% end March 2024.

Citibank Consumer business integration remains on track. Deposits are largely stable while there has been strong growth in retail assets and wealth management led by improvement in cross sell metrics.

The bank has completed the migration of the CV/CE Loans portfolio in March 2024. The integration of the other Assets and Liabilities remain on track.

Digital Banking performance continues to remain strong.

FY24 NIM was 4.07% up 5 bps yoy, in line with consistent commentary that NIMs should be compared on a 12 month basis.

Credit cost at 0.37%, lower 3 bps yoy

Standard asset coverage ratio was 1.26%. All provisions by GNPA ratio at 159% improved 13.73% yoy

The reported CET -1 ratio at end March 2024 of 13.74% is after fully incorporating the impact of the Rs 1612 crore investment in Max Life funded in April 2024 and proposed dividend at the rate of 50% or Rs 1 per share.

The Bank assesses it capital position on two pillars i.e. growth and protection. The bank does not need equity capital for either pillar.

The bank is PSL compliant at a headline level and at each sub segment level in FY24.

The progress on structural NIM drivers continues, with improvements across all variables. The share of loans and investments rose 168 bps yoy to 88% of total assets end March 24. The share of retail and CBG advances jumped 303 bps yoy to 71 % of total advances end March 2024.

Low-yielding RIDF bonds declined by Rs 9007 crore over a year ago. RIDF comprised 1.5% of total assets end March 2024 compared to 2.3% at end March 2023.

Technology and digital spends grew 32% yoy and constituted 9.3% of total operating expenses.

The bank has added 12,735 people from same period last year mainly to growth businesses and technology teams. The bank added 4,983 people in the quarter.

The Bank continues to prudently carry 100% provision on its AIF investments.

The cumulative non NPA provisions stands at Rs 12134 crore end March 2024 comprising (a) Provision for potential expected credit loss of Rs 5,012 crore (b) Restructuring provisions of Rs 535 crore, (c) standard assets provision at higher than regulatory rates of Rs 2029 crore and (d) weak assets & other provisions of Rs 4,558 crore.

The Bank sold IBPCs in the current quarter aggregating to Rs 4564 crore. Including IBPC sale, the loan growth was 4% qoq and 15% yoy.

Loan book is granular and well-balanced with retail advances constituting 60% of the overall advances, corporate loans at 29% and CBG at 11%.

About 70% of loans are floating rate. About 47% of fixed rate book matures in 12 months.

Retail advances grew 20% yoy and 7% sequentially. About 72% of the retail book is secured.

Including IBPC sale, the domestic corporate loans book grew 10% yoy and flat qoq.

The commercial banking book grew 17% yoy and 5% qoq. About 83% of CBG loan book is PSL compliant.

Asset quality continues to improve. Gross slippages were Rs 3471 crore in Q4FY2024 comprising of Rs 3110 crore in retail, Rs 163 crore in CBG and Rs 198 crore in WBCG.

For the quarter 35% of the gross slippages are attributed to linked accounts of borrowers which were standard when classified or have been upgraded in the same quarter.

Recoveries from written off accounts for the quarter was Rs 919 crore.

In the medium term to long terms the bank believes advances can grow 300-400 bps faster than industry.