Axis Bank reports highest ever quarterly profit, Asset Quality sees strong improvement and also a strong improvement in the overall business segment | Q2 FY23 Conference Call Highlights

Business Highlights:

Overall system credit growth has improved owing to better consumption demand, strong working Capital Demand, and improving refinancing business.

The global geopolitical and macro environment remains uncertain and the bank remains cautious regarding the same.

There is a risk of Inflation, Liquidity tightening through the Central Banks and Rate Hikes may prove to be a headwind for the economy.

The credit growth of the overall system and domestic consumption remained strong throughout the economy.

The credit card segment grew 47.1% YoY/14.4% QoQ led by Flipkart Axis, Google, and Airtel co-branded credit cards have helped increase monthly acquisitions.

The Bank aims to have a CASA of more than 46%.

The Bank continued to witness strong momentum across our focused Retail and SME business segments that grew 22% YOY and 28% YOY.

The combined portfolio of the three segments (i.e. Small Business Banking, SME & Mid Corporate) grew 41% YOY and now constitutes 20% of the loan book, up ~542 bps in the last 8 quarters.

The Government’s business performance remains strong as the bank continue to add new mandates and gain market share. This business has transitioned from being deposit-centric to more solution-centric

Retail Book:

The retail segment momentum was steady with a growth of 22.6% YoY and 2.6% QoQ growth.

Secured to Unsecured Mix is at 79:21.

Loan Book:

68% of the loans are floating rates which positions the bank well in a rising interest rate environment.

~45% of the bank’s fixed rate book matures in 12 months.

Deposits:

On deposits, the bank has gained over 69 bps market share in 3 years and the market share stands at 4.7% as of Sep’22.

CASA Balances are up 13% YoY.

Total Deposits at 8.10 Lakh Crores in Q2 FY23 vs 7.36 Lakh Crores in Q2 FY22.

Advances:

Total Advances at 7.30 Lakh Crores in Q2 FY23 vs 6.21 Lakh Crores in Q2 FY22.

The Bank continues to grow faster than the industry with an incremental market share of 7% in the last 3 years and a closing market share of 5.7% as of Sep’22.

Profitability:

NII for Q2 FY 23 stood at Rs. 10,360 crores, growing 31% YOY and 10% QOQ.

NIMs for Q2 FY 23 stood at 3.96%, growing 57 bps YOY and 36 bps QOQ. Domestic NIMs crossed 4% during the quarter.

The fee income stood at Rs 3,862 crore, growing 20% YOY and 8% sequentially.

Trading Loss for the quarter stood at Rs 86 crore compared to a loss of Rs 667 crore in the previous quarter and a profit of Rs 473 crore YoY.

Technology and digital spending grew 19% YOY and constituted ~8% of total operating expenses.

The Cost Income ratio for Q2FY23 at 46%, improved 328 bps YoY and 641 bps QOQ.

The Operating profit for Q2 FY23 is Rs 7,716 crore, increasing 30% YOY and 31% QOQ. Core operating profit for Q2 FY 23 is Rs 7,802 crore, growing 43% YOY and 19% QOQ.

The Profit after tax stood at Rs 5,330 crore, growing 70% YOY and 29% QOQ.

Capital Adequacy Ratio:

The total capital adequacy ratio including profit for the half year ended September 30, 2022, is 17.72% and our CET-1 ratio is 15.14%.

The average LCR ratio of the quarter was ~ 121%, improving sequentially.

Credit Cards:

In credit cards, the bank continues to be ranked 4th largest with over 13% incremental spends market share in the last nine months, against 11.4% period ending market share for cards in force.

The credit card spends were up 70% YOY and 17% QOQ and card advances were up 47% YOY.

The bank has issued 10 Lakh credit cards in this quarter.

Mobile Banking:

The Axis Mobile app has over 1 Crore monthly active users.

The Bank in partnership with CRMNEXT won the 'Best CRM Implementation' at the Asian Banker Financial Technology Innovation Awards 2022.

Axis-CitiBank Merger Update:

The CCI approval is in place, and the bank expects to complete the transaction by the end of the fourth quarter of fiscal 2023