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Published: July 15, 2024
Updated: July 15, 2024

Axis Bank

Tie-up with Piramal Fin for rural loans

Axis Bank and Piramal Finance have joined hands to establish a co-lending business aimed at extending loans to underserved segments in India. The partnership is aimed at reaching middle- and low-income borrowers who lack access to traditional banking services, as well as expanding financial inclusion to rural and semi-urban areas beyond major cities

Earlier, reviewing the performance of Axis Bank during fiscal 2024, Mr Chaudhry said that “the bank has had another strong year of performance built on the GPS (growth, profitability, sustainability) strategy that has set Axis Bank firmly on the path to becoming a resilient allweather franchise with investments made in building blocks across people, processes, technology, and several multiplicative projects over the past five years.”

GROWTH PATH

According to him, 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 its growth trajectory across focus business segments, including MSME, Bharat and retail assets, and has improved the quality of its deposit franchise. The bank also scaled up the branch network by crossing the milestone of 5,000 branches, and opened a record 475 branches in FY24.

As regards the performance in Q4FY2024, Mr Chaudhry said the bank delivered consolidated ROE of 20.87% and has delivered ROEs of greater than 18% for the past 7 quarters. The bank is now well capitalized with organic net accretion of 44 bps of CET -1 capital in FY24.

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

The bank continues to drive higher growth in LCR (liquidity coverage ratio) accretive (retail and small business) deposits that stood at 18% yoy, 500 bps higher than the overall deposits growth. The bank is carrying this momentum into FY 25. The higher-yielding focus segments, including SME, mid-corporate, SBB (small business banking), rural, personal loan and credit cards, together have grown at a CAGR of 25% in the last 4 years and now constitute 43% of total advances, up by over 1,210 bps during this period.

FEE PROFILE

Maintaining that “the bank will continue to focus on driving growth across business segments while following a capital-efficient model,” Mr Chaudhry added that “the fee profile is among the best in the industry today, with granular fees comprising 93% of overall fees, up 600 bps in last five years. On the Merchant Acquiring Business, the bank moved from No. 2 to the leadership position during the year with a terminal marketshare of 20% at the end of March, 2024.

According to him, the 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% was lower 3 bps yoy. Standard asset coverage ratio was 1.26%. All provisions by GNPA ratio at 159% improved 13.73% yoy

The cumulative non-NPA provisions stand at Rs 12,134 crore at the end of 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 2,029 crore, and (d) Weak assets and other provisions of Rs 4,558 crore

The loan book is granular and well-balanced, with retail advances constituting 60% of the overall advances, corporate loans at 29% and CBG (combined bank guarantee) at 11%. Retail advances grew 20% yoy and 7% sequentially. About 72% of the retail book is secured. The commercial banking book grew 17% yoy and 5% qoq. About 83% of the CBG loan book is PSL (priority sector lending) compliant.

The bank’s asset quality continues to improve. Gross slippages were Rs 3,471 crore in Q4FY2024, comprising of Rs 3,110 crore in retail, Rs 163 crore in CBG and Rs 198 crore in WBCG. Recoveries from written off accounts for the quarter were Rs 919 crore. In the medium- to long term, the bank believes advances can grow 300-400 bps faster than the indus