Axis Bank Q4FY17 Concall Summary

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Performance Highlights

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  • The growth in CASA balances is 26% yoy and 21% qoq. The CASA ratio stands at 51%
  • Savings and current accounts grew at 19%/37% yoy and 7%/49% qoq. The sharp rise in liquidity is due to demonitisation
  • QoQ Growth in the retail loan book is at 12% with SME advances growth rate at 14% whilethe YoY growth in the retail loan book is at 21% and SME advances growth rate at 10%.
  • Gross slippages has increased from 4560 cr. in Q3FY17 to 4811cr. Net slippages have decreased from 4210 cr. to 2008 cr. Provision Coverage stands at 65%.
  • Credit cost for the quarter is 1.73% while for the full year it is at 2.82%.
  • There has been a 111% increase in PAT and 27% increase in core operating profits. However, profit for the quarter and year have reduced by 43% and 55% respectively.
  • The tier 1 capital ratio has reduced from 12.51% to 11.87% at the end of FY16.
  • The total number of branch additions are 93 taking the total to 400.

Indian banking scenario

  • India’s FY 17 GDP growth rate is expected to be 7.1% with union budget fixing fiscal deficit at 3.2% for FY18 and impact of demonitisation reduced in many areas.
  • The primary issues facing the industry are slowdown in capex activity and high leverage in corporate balance sheets which have caused credit demand and growth to be subdued.
  • Demonitisation has led to excess liquidity in the market which resulted in aggregate system deposit growth of 13% yoy.
  • The company expects investments to be modest in the first half of FY18 with a gradual revive in capex with spends on affordable housing, renewable energy etc.

Digital Platform Growth

  • The YoY increase in digital transaction volumes are 7% while mobile spends in Q4FY17 has seen a growth of 76% with transaction volumes increasing 54% in the same quarter.
  • Cards portfolio spends in Q4FY17 has increased 83% yoyto 17157 cr. with the bank being the 4th largest credit card issuer with a market share of 11%


  • The loan growth is at 10% yoy which has been largely driven by retail and SME sectors with retail lending showing a strong growth of 22% which exclude loans against FCNR(B) deposits.
  • The SME loan growth stands at 10% yoy and 14% qoq.
  • Corporate advances are flat with demand for corporate credit being blank.

Asset Quality

  • One account with loan outstanding of Rs 1661 cr. in the cement sector was downgraded and successfully upgraded in the same quarter which has resulted in a 25% provision against the loan outstanding.
  • Gross NPA ratio has decreased to 5.04% from 5.2% with the net NPA ratio decreasing from 2.18% to 2.11% at the end of December.
  • The watchlist has reduced to 2.28% of customer assets (9436 cr.) from 2.83% of assets.
  • Total slippages from the corporate lending portfolio stand at 4320 cr. for the quarter.
  • 83% of the total slippages came from the watchlistportfolio. 58% of this list has sunk to NPAs
  • The key sectors which contributed to the slippages from the watchlist portfolio are metals, infrastructure, engineering and electronics. Total recoveries and upgrades stand at 2804 cr.
  • 5260 cr. was recognized as NPA in Q1 and Q2 of FY17, 1811 cr. in Q3FY17 and the remaining 2407 cr. remains standard on 31st Mar. 2017.
  • The bank has implemented SDR in 5 standard accounts with the underlying loan amount being 1293 cr. with a provision of 15% on the entire pool.
  • The 480 cr. on movement of SDR accounts to slippage to NPAs.
  • Provision of 199 cr. in standard assets which has been created due to a negative standard asset provisioning due to slippages minus the loan book and the 25% provision amount.
  • The bank has sold assets worth 2354 cr. with net book value of 1828 cr. to ARCs again a sale consideration of 1628 cr. The ARC sale is a mix of one standard and NPA accounts written off. This does not have any impact on NPL movement.
  • Total recoveries and upgrades amount to 2804 cr.
  • During the quarter, slippages from the restructured book stand at 942 cr.
  • Total number of contingent provisions available=262 cr.


  • The quarterly NII has increased 4% yoy and 9% qoq with NIM which has improved by 40 basis points over the last quarter at 3.83% and domestic NIM at 4.11% .
  • For FY17, there has been a decrease of 23 basis pointsinNIM to 3.67%.
  • Bank expects the NIM margins to reduce in a short term basis but expects the trend to reverse in 2 years.
  • Trading income stands at 428 cr. which is up 350% yoy.
  • There has been an 18% increase in operating expenses yoy.
  • Fees income which constitutes 31% of operating revenue has increased 8%.
  • Retail fees has grown by 31% yoy and card fees has grown by 30% yoy
  • Corporate banking fees has declined by 11% yoy.
  • Operating profits standing at 4375 cr. have declined 1%.
  • Operating profit margin is at 3.01% when compared to 3.41% the previous year.

Capital Adequacy

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  • Total capital adequacy is at 14.95% with tier1 capital adequacy ratio at 11.87%
  • The tier 1 ratio as of Q3FY17 was 12.99% and 12.51% as of 31st Mar. 2017.
  • 170 basis points of tier 1 is because of growth, 11 points due to new guidelines regarding capital, 68 basis points are due to additional capital and 48 basis points are due to profit.
  • Risk weighted assets for the bank stands at 472313 cr. and 17% yoy growth.

Subsidary Performance

  • The growth in average loans to 4358 cr. and 49% growth in PAT to 165 cr. in FY17.
  • The retail broking business has seen a 41% in active client base.
  • Axis Capital reported 113 cr. in PAT and Axis securities grew 44% to 52 cr.

Credit Cost

  • Credit cost guidance range is 175-225 basis points.
  • Assumptions surrounding the guidance are :-
  • o Improvement/deterioration in underlying operating environment.
  • o Resolution mechanism of large accounts that have been termed NPA.
  • o Credit growth impacts
  • Bank’s average credit cost is 94 basis points. At 280 basis points, bank is above the long term average.  Bank expects to return to long term averages in FY19.


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  • Standard Asset provisioning was 187 cr. NPA provisioning was 1742 cr.
  • For SDRs, provision of 249 cr. is on investment.
  • NIM compression is already compressed in 20 basis points.
  • 4320 cr. was the slippage from the corporate book and 83% was from the watchlist.