Private Sector Bank Axis Bank has announced its Quarterly Results for Q4FY21 on 29th April 2021. How did the company perform in Q4FY21? Will the quarterly results good for its shareholders? To know answers to all such questions, go through this 5 Point Analysis of Q4FY21 Results of Axis Bank.
Axis Bank, one of India’s major Private Sector Banks, has announced its Q4FY21 Results on Thursday 29th April 2021. The Results show improvement from its past performances. To evaluate the quarterly performance of Axis Bank, we will be conducting a 5 Point Analysis of its results, which will be as follows:
Axis Bank- 5 Point Analysis
Interest Earned of the Bank is down by 4% YoY from Rs. 16,234 Cr. in Q4FY20 to Rs. 15,545 Cr. in Q4FY21. This has happened due to lowered interest rate on credits. Interest Earned was 15,498 Cr. in Q3FY21.
A significant positive thing that has happened for the bank is Interest Expended. Interest Expenditure in Q4FY21 stood at Rs. 7,990 Cr., which is down by 15% from Interest Expenditure of Q4FY20 from Rs. 9,426 Cr. Sequentially, it has reduced by 2% from Rs. 8,125 Cr.
This downfall in Interest Expenditure has happened along with a consistent decline in the Cost of Deposits from 5.19% in December 2019 to 4.09% in December 2020 and 3.90% in March 2021.
The bank’s net Interest Income (NII) has increased by 11% YoY in the quarter ended 31st March 2021 to Rs. 7,555 Cr. from Rs. 6,808 Cr. in Q4FY20. Quarter-on-Quarter, it has grown by 2.5% from Rs. 7,373 Cr. in December Quarter.
Other Incomes of the Bank has grown by 17% YoY from Rs. 3,985 Cr. in Q4FY20 to Rs. 4,668 Cr. in Q4FY21. It has increased by 24% QoQ from Rs. 3,776 Cr. in Q3FY21.
Of.stand the bank has also increased by 13% YoY from Rs. 10,793 Cr. in Q4FY20 to Rs. 12,223 Cr. in Q4FY21. Bank has recorded an increase of 10% in operating revenue from Rs. 11,149 Cr. in December Quarter of FY21.
Operating Expenses of the bank have gone up by 8% YoY to Rs. 5,359 Cr. This expense has increased by 6% QoQ from Rs. 5,054 Cr. in Q3FY21.
Another good thing for the bank is a rise in pre-provisioning Operating Profit (PPOP) by 17% YoY and 13% QoQ from Rs. 5,851 Cr. and Rs. 6,095 Cr. respectively to Rs. 6,865 Cr.
Total Provisioning and Contingencies of the Bank is Rs. 3,295 Cr. in Q4FY21. Same has gone down by 57% YoY from Rs. 7,730 Cr. in Q4FY20. Quarter-on-Quarter, it has decreased by 28% from Rs. 4,604 Cr. in Q3FY21.
With Profit before Tax (PBT) of Rs. 3,570 Cr. in Q4FY21, the bank has managed to move into profit territory. It has reported a loss of Rs. 1,879 Cr. in the same quarter in the last financial year. PBT has grown by a massive 139% QoQ from Rs. 1,491 Cr. in Q3FY21.
Profit After Tax (PAT) or Net Profit of the Bank has also grown significantly by 140% QoQ from Rs. 1,117 Cr. in the December Quarter of FY21 to Rs. 2,677 Cr. in the quarter ended 31st March 2021. Bank has reported a loss of Rs. 1,388 Cr. in Q4FY20.
The yearly Performance of Axis Bank is quite appreciable.
Interest Earned of the Bank has increased by 2% on the full-year basis from Rs. 62,635 Cr. in FY20 to Rs. 63,645 Cr. in FY21.
While the interest expenditure of the bank has gone down by 8% from Rs. 37,429 Cr. in FY20 to Rs. 34,406 Cr. in FY21.
Fall in Interest Expenditure of the bank has led to a rise in its Net Interest Income. NII of the bank in FY21 is Rs. 29,239 Cr., up by 16%.
On a full-year basis, the Net Profit of the Bank has grown by a magnificent 305% from Rs. 1,627 Cr. in FY20 to Rs. 6,588 Cr. in FY21.
Axis Bank-Q4FY21 & FY21 Results
The size of the balance sheet has increased by 9% YoY from Rs. 9.15 Lakh Cr. in Q4FY20 to Rs. 9.96 Lakh Cr. in Q4FY21. Quarter-on-Quarter, this figure has increased by 6% from Rs. 9.38 Lakh Cr. in Q3FY21.
Bank has total advances of Rs. 6.23 Lakh Cr., which is also up by 9% YoY from Rs. 5.71 Lakh Cr. in Q4FY20. Also, the Advances of the bank have grown by 7% QoQ from Rs. 5.82 Lakh Cr. in Q3FY21.
Total Deposits of the Bank is Rs. 7.07 Lakh Cr. in Q4FY21. Total Deposits of the Bank were Rs. 6.40 Lakh Cr. in Q4FY20 and Rs. 6.54 Lakh Cr. in Q3FY21, amounting to growth of 10% YoY and 8% QoQ, respectively.
The Credit to Deposit Ratio of the bank stood at 89%, similar to the ratio level of Q4FY20 and Q3FY21.
Axis Bank has increased borrowings by 5% QoQ from Rs. 1.36 Lakh Cr. in Q3FY21 to Rs. 1.43 Lakh Cr. in Q4FY21. It was Rs. 1.48 Lakh Cr. in the quarter ended 31st March 2020.
Reserve and Surplus of the Bank stand at Rs. 1,00,990 Cr. as of 31st March 2021, up by 20% YoY.
HDFC Bank has a Credit to Deposit Ratio of 84%, while the same is 88% in the case of Axis Bank, which shows the selectiveness of HDFC Bank in Lending.
Regarding Liquidity Coverage Ratio (LCR), Axis Bank has an LCR of 115%, whereas HDFC Bank has an LCR of 138%, which is relatively better than Axis Bank.
Again in terms of Advances Growth, HDFC Banks is ahead of Axis Bank. It is having Advance Growth of 14% YoY against 9% of Axis Bank.
The Advance Book of Axis Bank between March 2020 to March 2021 has increased from Rs. 5.71 Lakh Cr. to Rs. 6.23 Lakh Cr. Whereas the same has grown by Rs. 9.9 Lakh Cr. to Rs. 11.3 Lakh Cr. in HDFC Bank during the same period.
Deposit Growth on a year-on-year basis is 10% for Axis Bank and 16.3% for HDFC Bank.
The Deposit Book of Axis has increased just from Rs. 6.4 Lakh Cr. to Rs. 7 Lakh Cr. between March 2020 to March 2021. During the same period, the Deposit Book of HDFC Bank has gone up to Rs. 13.4 Lakh Cr. in March 2021 against Rs. 11.5 Lakh Cr. in March 2020.
HDFC Bank is comparatively more conservative than Axis Bank, with Lower C/D Ratio and Higher LCR.
Still, HDFC Bank can attain higher growth numbers in Advances & Deposits despite having a higher base vs. Axis Bank.
Axis Bank- Balance Sheet Summary
3) i) Deposit Mix:
Axis Bank is having Total Deposits of Rs. 7.07 Lakh Cr. as of 31st March 2021. It has gone up by 10% YoY from Rs. 6.40 Lakh Cr. in Q4FY20. The total Deposit of the bank was Rs. 6.54 Lakh Cr. in Q3FY21.
Out of the total deposits, Term Deposits of the Bank stand at Rs. 3.89 Lakh Cr. up by 3% YoY from Rs. 3.76 Lakh Cr. in Q4FY20. Quarter-on-Quarter, the same has increased by 4.5% from Rs. 3.72 Lakh Cr. in Q3FY21.
Retain Term Deposits (QAB) have gone up by 15% YoY from Rs. 2.47 Lakh Cr. in Q4FY20 to Rs. 2.83 Lakh Cr. in Q4FY21. Same has increased by 4.4% QoQ from Rs. 2.71 Lakh Cr. in the December quarter of the FY21.
CASA Deposit of the bank is up by 18% YoY to Rs. 2.77 Lakh Cr. in Q4FY21. Sequentially it has grown by 7% from Rs. 2.59 Lakh Cr. in Q3FY21.
In Deposit Mix, CASA deposits account for 42% of the total deposit mix, and Term Deposit accounts for 58%.
The bank is presenting the rising CASA Trend quarterly. It was 39% in Q4FY20, and currently, it stands at 42%.
Also, the Cost of Deposits has consistently gone down from 5.01% in Q4FY20 to 3.90% in Q4FY21, which is a positive sign for the bank.
Axis Bank- Deposit Mix (Q4FY21)
3) ii) Advances Mix:
The bank has a Retail Loan book of 35%, 54%, and 11% of Corporate Loans and SME Loans, respectively.
The bank is shifting from the side of Corporate Banking to Retail Banking.
Retail Loan Book has grown by 10% YoY. While YoY growth in SME Loans and Corporate Loan books is 13% and 7%, respectively.
Axis Bank- Advances Mix (Q4FY21)
The Net Interest Margin of the Bank is at 3.56% as of March 2021, which is comparatively low in terms of other competitor banks with a NIM of more than 4%. This might be due to high provisioning by Axis Bank.
Cost to Income Ratio has also decreased from 45.3% in December 2020 to 43.8% in March 2021, which is a positive sign for the bank.
The CASA ratio of the bank is 42% in the quarter ended 31st March 2021.
Bank was having a Capital Adequacy Ratio of 17.4% in June 2020. Post this quarter. Bank raised Rs. 10,000 Cr. Equity Capital In August 2020 which led to an increase in ratio to 19.38% in September 2020, it is currently 19.12%.
Return on Average Assets is currently 1.11% as of March 2021. From this viewpoint, this ratio should be improved and reach 1.5% to 2%.
Axis Bank- Key Ratios
The Gross NPA of the Bank has gone down from 4.55% in Q3FY21 to 3.70% in Q4FY21, which seems comfortable.
Net NPA of the Bank as of 31st March 2021 is 1.05%, down from 1.19% in December Quarter.
The Provision Coverage Ratio of the bank is 72% in the March Quarter of FY21.
3 Major Factors driving the Fall in Gross NPA QoQ:
1. Decline in Fresh Slippage QoQ
2. Higher Upgradation & Recoveries in Q4 FY21 vs. Q3 FY21
Q4 FY21 : Rs.3,462 Cr
Q3 FY21 : Rs.2,162 Cr
3. Rise in Gross NPA written-off during Q4FY21
Q4 FY21 : Rs.5,553 Cr
Q3 FY21: Rs.4,257 Cr
Axis Bank has posted an excellent quarterly result with entering into the Profitability zone after facing losses on axis bank share price in the same quarter of the previous financial year. Other Figures of the bank have also improved for the bank, and hence one should keep this stock on their radar but should invest with proper research and study.