Axis Bank Limited · NSE:AXISBANK
Axis Bank — Global BFSI Conference (December 2015)
21 slides from Axis Bank's conference presentation, December 2015
Slide 1: Performance and Outlook
Performance and Outlook December 2015
Slide 2: Agenda
Agenda • Macro Picture • Performance Highlights • Q&A 2
Slide 3: Agenda
Agenda • Fundamentals (IIP) • Output conditions • Macro Picture • Inflation • Rates • Credit and Deposit growth • Performance Highlights • Q&A 3
Slide 4: Core fundamentals have improved moderately in recent months
Core fundamentals have improved moderately in recent months Growth in IIP and Components 14% (% YoY, 3MMA) • On FYTD basis, IIP growth of 3.9% vs Mining 2.9% last year 12% Manufacturing 10% • Manufacturing up almost 2X (4.1% Electricity vs 2.2%) 8% IIP • Electricity up sharply in recent 6% months, p
Slide 5: However, signals from output indicators are mixed
However, signals from output indicators are mixed Select output indicators Source: MOSPI; Axis Bank Research • Cement and steel production growth remain weak • Car production is increasing, but at a moderating pace • CVs had a better year, reflecting stronger commercial activity 5
Slide 6: Inflation benign, extent of pricing weakness likely even higher
Inflation benign, extent of pricing weakness likely even higher CPI Inflation and components CPI vs WPI vs GDP Deflator 10% Food+ (45.9%) 12% YoY% Inflation Fuel+ (6.8%) 10% GDP Deflator Core (47.3%) CPI 8% 8% WPI CPI Combined 6% 4% 6% 5.34% 5.32% 2% 5.00% 0% 4% 4.4% -2% -4% 2% -6% Jan-14 May-14 Sep
Slide 7: RBI continues to ease rates and the easing is being transmitted by banks
RBI continues to ease rates and the easing is being transmitted by banks, both on deposit and lending side Repo Rate vs Axis Bank Lending and Deposit Rates (%) 11.0 •50 bps rate cut by RBI in 10.25 Base Rate September 10.0 •Banks responded with significant 1 year FD Rate 9.50 transmission; 9.00 9.0
Slide 8: Credit and deposit growth are near multi year lows, but retail credit growth remains strong
Credit and deposit growth are near multi year lows, but retail credit growth remains strong Banking system credit and deposit growth • Non-food credit growth at 9.2%; deposit 20% Non-food credit growth (%, YoY) Deposit growth (%, YoY) growth at 11.1% 17% • Sectorally, the credit story is all in Reta
Slide 9: Agenda
Agenda • Macro Picture • Performance Highlights • Q&A 9
Slide 10: The Bank continues to deliver strong growth and consistent shareholder returns
The Bank continues to deliver strong growth and consistent shareholder returns Consistently strong shareholder returns 1 1 2 3 1 Includes profits for the half year; 2 Include extension counters; 3 Includes overseas subsidiary in UK 10
Slide 11: H1FY16 has seen satisfactory performance on most key outcomes
H1FY16 has seen satisfactory performance on most key outcomes Strong financial performance in H1FY16 • Retail franchise continues to gain traction • Strong CASA and RTD growth • CASA+RTD = 80% of total deposits • Retail advances growth of 27% YOY • Retail Loans now 40% of total loans • Strong growth
Slide 12: Core revenue streams have been growing steadily, providing a powerful and predictable revenue engine
Core revenue streams have been growing steadily, providing a powerful and predictable revenue engine… Net Interest Income (` Cr) • Steady growth in NII (CAGR of 21% since FY12) • Robust growth in core fee line • Continued diversification in sources of Fee Income • Increasing amounts of fee coming fr
Slide 13: …Resulting in steady PAT delivery year on year
…Resulting in steady PAT delivery year on year 13
Slide 14: Our time-tested CASA franchise drives steady cost of funds and healthy NIMs
Our time-tested CASA franchise drives steady cost of funds and healthy NIMs • CASA growth of 14%YOY on daily average basis • RTD forms 64% of total TDs • CASA+RTD forms 80% of total deposits 14
Slide 15: Asset quality of the Bank has been steady in turbulent times
Asset quality of the Bank has been steady in turbulent times • In Q2, the Bank sold two assets, worth `1,820 cr to ARCs, against a consideration of `650 cr • We utilised `850 cr from contingent provisions built in prior quarters to absorb the write-off against these loans 15
Slide 16: The retail franchise continues to grow strongly
The retail franchise continues to grow strongly Retail Lending Portfolio Mix 1 Card Spends 1 Including extension counters • 154 new branches opened in H1 • Continued momentum in Retail Advances – now 40% of advances book • Growth in Cards business continues to be extremely strong 16
Slide 17: With Digital now front and center in the Bank's retail strategy, clear customer outcomes are starting to become visible
With Digital now front and center in the Bank’s retail strategy, clear customer outcomes are starting to become visible The Award- winning Mobile App Lime: An integrated money management platform Ping Pay: The multi-social Payments App 17
Slide 18: The Corporate Bank is delivering robust growth in a slow market
The Corporate Bank is delivering robust growth in a slow market Advances Transactions Fees Corporate Current Banking Accounts SME CMS Accounts SME loans (including non-retail agriculture loans) grew 9% YOY 18
Slide 19: The growth in Corporate Banking has come with steadily improving rating distribution
The growth in Corporate Banking has come with steadily improving rating distribution, even in the face of significant downgrades Rating Distribution - Corporate Banking Rating Distribution - SME 7% 6% 8% 6% 6% 11% 11% 10% 11% 12% 16% 14% 15% 16% 15% 15% 15% 20% 18% 18% 35% 34% 31% 32% 31% 57% 60% 63
Slide 20: In Summary, the Bank is in a great position in the competitive environment
In Summary, the Bank is in a great position in the competitive environment • Financially strong: o Healthy capital ratios; strong profitability ratios; moderate risk levels • Conservative provisioning • Solid retail franchise: o Strong on both deposit and lending side; extensive network; loyal custo
Slide 21: Agenda
Agenda • Macro Picture • Performance Highlights • Q&A 21