 "Q1 results")
Axis Bank, the third-largest private sector lender in the country, reported a 41 per cent increase in net profit to Rs. 5,797 crore for the quarter ended JUNE 30, 2023. This growth was driven by healthy loan growth and trading gains.
The bank’s net interest income grew 27 per cent year-on-year (YoY) to Rs. 11,959 crore, aided by a 22 per cent growth in advances to Rs. 8.58 trillion. The net interest margin also swelled by 50 basis points (bps) YoY to 4.1 per cent.
During the April-June quarter of 2023-24 (FY24), the bank reported trading gains of Rs. 519 crore, a significant improvement compared to the loss of Rs. 667 crore during the same quarter last year.
Fee income for the quarter grew by 28 per cent on-year to Rs. 4,488 crore.
While asset quality improved, with gross non-performing asset (NPA) to gross advance ratio falling to 1.96 per cent, from 2.86 per cent a year ago, loan-loss provisions increased to Rs. 1,035 crore, from Rs. 359 crore due to a rise in bad loans from farm loans.
Puneet Sharma, chief financial officer, Axis Bank, stated, “First quarter (Q1) has seasonality of rural NPAs. We have prudent provisioning policies; if you look at our provision coverage ratio, it is at 80 per cent.”
The net NPA ratio as of June 30, 2023, was 0.41 per cent, compared with 0.39 per cent as of March 31, 2023, and 0.64 per cent a year ago.
The bank clarified that it had not utilised Covid provisions during the quarter and held cumulative provisions (standard plus additional other than NPA) of Rs. 11,848 crore at the end of Q1FY24.
Total deposits grew 17 per cent YoY, with savings account deposits growing 22 per cent, current account deposits growing 23 per cent, and total term deposits growing 13 per cent YoY. The current and savings account deposits constituted 45.5 per cent of the total deposits.
Amitabh Chaudhry, managing director and chief executive officer, Axis Bank, mentioned that there is a visible improvement in the quality of the deposit franchise.
“We have made significant progress in maintaining the quality and granularity. The bank’s deposit franchise grew 400 bps faster than the industry,” he said.
The bank’s corporate loan book grew 25 per cent YoY to Rs. 2.73 trillion, of which the domestic corporate book grew 36 per cent YoY.
Chaudhry also shared in a post-earnings media interaction that the disbursement pipeline is healthy, with 70 per cent of the pipeline coming from term loans and the remaining 30 per cent from working capital.
Regarding the acquisition of Citi’s retail and wealth management business, Chaudhry stated that Citi customers have been successfully transitioned to Axis Bank. He noted positive trends in credit card spends, higher acquisitions, and stronger term deposit mobilisation, and expects synergy benefits to come through.
On the topic of attrition rate, Chaudhry mentioned that the rate is higher at the branch level and sales team. He stated that attrition in the front line (sales and branch) is around 33-35 per cent, while attrition in senior positions and the corporate office is generally lower. He acknowledged that attrition is common in the industry due to growth opportunities in the Indian economy. He also highlighted that attrition of Citibank employees who joined Axis Bank is lower compared to the attrition they experienced in the past few years.
