Release Date: October 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Axis Bank Ltd (FRA:UZC, Financial) reported a consolidated ROE of 18.08%, showing an improvement of 140 basis points quarter-on-quarter.
- The bank's operating profit increased by 24% year-on-year and 6% quarter-on-quarter, driven by healthy operating income growth.
- Axis Bank Ltd (FRA:UZC) achieved a 14% year-on-year growth in deposits and a 24% year-on-year growth in new customer acquisitions.
- The bank's CET1 ratio stands at 14.12%, indicating a strong capital position.
- Axis Bank Ltd (FRA:UZC) continues to expand its branch network, opening 150 new branches in the last quarter and 200 in the first half of the fiscal year.
Negative Points
- The bank's net interest margin declined by 6 basis points quarter-on-quarter, largely due to interest on income tax refund recorded in the previous quarter.
- Retail slippages are largely from unsecured product segments, indicating stress in this area.
- The bank's loan growth of 11% is below the system average, raising concerns about its competitiveness.
- Axis Bank Ltd (FRA:UZC) made provisions aggregating to INR520 crores under the head provision for other contingencies, which are prudent but not for current or future NPAs.
- The bank's CASA ratio has remained flat, indicating challenges in improving the quality of low-cost deposits.
Q & A Highlights
Q: Can you provide more details on the deposit growth strategy and the impact of the IT refund this quarter?
A: Puneet Sharma, CFO, clarified that last quarter's interest on income tax refund was INR220 crores. This quarter, favorable tax orders allowed for a reversal of INR550 crores in tax provisions. Munish Sharda, Executive Director, highlighted the bank's focus on improving deposit quality and growth through a multi-quarter transformation project, premiumization, and expanding branch networks.
Q: What is the reason for the increase in SLR investments, and can you provide more color on asset quality, particularly retail slippages?
A: Puneet Sharma explained that the increase in SLR investments is partly due to higher runoff rates on retail deposits. Retail slippages are primarily from unsecured segments, and the bank is monitoring and adjusting its portfolio accordingly. Recoveries have improved, aligning with previous expectations.
Q: How is Axis Bank addressing the draft RBI norms on overlapping businesses in subsidiaries?
A: Puneet Sharma stated that the bank is reviewing the draft circular's implications and intends to make representations for clarification. The bank will prioritize shareholder interests while awaiting final guidelines.
Q: Can you discuss the loan growth strategy, particularly in retail and corporate segments, and the outlook for cost of deposits?
A: Amitabh Chaudhry, CEO, emphasized a focus on returns and managing loan growth composition to optimize returns. Retail growth will be calibrated, especially in unsecured segments. Puneet Sharma noted that cost of deposits has remained flat, and the bank remains disciplined in deposit pricing.
Q: What is the rationale behind the INR520 crores contingent provision this quarter?
A: Puneet Sharma explained that the provision was made to strengthen the balance sheet, offsetting a one-time tax write-back of INR550 crores. This aligns with the bank's strategy to build a prudent balance sheet.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
