Axis Bank –

Q2 FY 25 results and concall updates –

Deposits @ 10.37 lakh cr, up 14 pc YoY ( CASA deposits grew by 5 pc, CASA ratio of 41 pc )
Advances @ 10.00 lakh cr, up 11 pc YoY

NII @ 13.48k cr, up 9 pc YoY
Non interest income @ 6.72k cr, up 34 pc YoY
Operating expenses @ 9.5k cr, up 9 pc YoY
Operating profits @ 10.7k cr, up 24 pc YoY
PAT @ 6.91k cr, up 15 pc YoY

Consol RoA @ 1.92 vs 1.83
Consol RoE @ 18.08 vs 18.67 pc

Gross NPAs @ 1.44 vs 1.73
Net NPAs @ 0.34 vs 0.36
Total provisions ( specific + standard + additional + contingent ) stand at 153 pc of Gross NPAs

NIMs @ 3.99 vs 4.11 pc YoY
Cost of Funds @ 5.45 vs 5.17 pc YoY

Total Branches @ 5577 on 30 Sep 25 vs 5377 on 31 Mar 24 (opened 150 branches in Q2 and 50 branches in Q1)

Breakdown of loan book –

Retail loans – 5.98 lakh cr, up 15 pc YoY
SME loans – 1.10 lakh cr, up 16 pc YoY
Corporate loans – 2.90 lakh cr, up 3 pc YoY

Gross slippages ( annualised ) @ 1.78 pc vs 1.97 pc QoQ vs 1.49 pc YoY

Net slippages ( annualised ) @ 0.96 vs 1.37 pc QoQ vs 0.59 pc YoY

Net credit cost @ 0.54 pc down from 0.97 pc in Q1

Fall in Gross and Net slippages on a QoQ and YoY basis is a key positive

Integration of Citi Bank’s entire portfolio with Axis bank completed in Jul 24. Behaviour of customers ( in terms of banking transactions post acquisition ) is satisfying

Cost / Income @ 47.29 pc, down 207 bps YoY

Bank’s head count has increased by around 4000 employees vs Sep 23 – due opening of new branches and hiring related to improve the bank’s IT infrastructure

Aim to open a total of 500 branches in the current FY

Most of the slippages are originating from the unsecured retail lending part of the book. Bank is monitoring the same and taking actions as deemed fit

Breakup of the retail loan book –

Home loans – 1.67 lakh cr, up 5 pc
Rural loans – 89.6k cr, up 20 pc
Personal loans – 75.4k cr, up 23 pc
Auto loans – 58.7k cr, up 6 pc
LAP – 67.2k cr, up 25 pc
SBB – 61.9k cr, up 23 pc
Credit Cards – 43.7k cr, up 22 pc
Commercial Equipment loans – 11.6k cr, up 4 pc
Others – 22.7k cr, up 26 pc
Total – 5.99 lakh cr, up 15 pc

71 pc of the retail book is secured, 29 pc is unsecured

Bank aims to accelerate the secured part of retail lending and calibrate the unsecured part of it – so as to best manage

Bank is maintaining its discipline on deposit rates. They intend to maintain this discipline going forward as well ( provided the mkt players behave responsibly )

In Q2, operating expenses went up by 9 pc. Bank expects this kind of moderate growth in costs to continue going forward as well

Expect the growth rates in home loans to remain moderate as the risk adjusted returns in this segment are on the lower side ( due lower yield on home loans ) – hence is Bank is going slow on them

The bank is not in a position to give a guidance weather the stress in unsecured – retail slippages has peaked or not

Small and Mid corporate book has been growing smartly for the Bank for last 5 yrs. In all likelihood, the same is likely to continue in the future as well. According to the management, MSME should turn out to be the best banking area for the next decade !!!

Bank believes that it can keep growing its loan book at rates 3-4 pc above the systemic credit growth. That should mean a loan growth in the vicinity of 14-16 pc. Q2 is an aberration. They believe that they can achieve these numbers for the full FY

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

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