Axis Bank Limited · NSE:AXISBANK
Axis Bank — Q3 FY17 Earnings Presentation
40 slides from Axis Bank's earnings presentation, January 2017
Slide 1: Quarterly Earnings Presentation Q3 FY17
Quarterly Earnings Presentation Q3 FY17 1
Slide 2: Safe Harbor
Safe Harbor Except for the historical information contained herein, statements in this release which contain words or phrases such as “will”, “aim”, “will likely result”, “would”, “believe”, “may”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “futu
Slide 3: Performance Highlights
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 3
Slide 4: Summary of Key Metrics for Q3FY17
Summary of Key Metrics for Q3FY17 73% YOY Net Profit 4% YOY Net Interest Income 4% YOY Fee Income 10% YOY Advances1 Return on Equity 4.44% NIM 3.43% 10% YOY Deposits1 GNPA 1 5.22% 21% YOY CASA1 PCR 1 64% 1 as on 31st December, 2016 4
Slide 5: Profit remains suppressed due to provision costs; operating parameters resilient
Profit remains suppressed due to provision costs. However operating parameters continue to be resilient. Retail franchise registered healthy performance Deposits 10% YOY Advances 10% YOY Fee Income 4% YOY 43% 45% 48% CASA 21% YOY Retail Advances Retail Fee Income 19% YOY 8% YOY SA Deposits 27% YOY E
Slide 6: Capital adequacy has strengthened during the quarter
Capital adequacy has strengthened during the quarter Trend in Capital Adequacy Ratio 16.59% 15.47% 15.29% 15.67% 15.20% 112 bps YOY 3.60%** 3.12% 2.78% 3.29% ** 3.17% 12.35% 12.51% 12.38% 12.03% 12.99% Dec-15* Mar-16 Jun-16* Sep-16* Dec-16* Tier 1 CAR Tier 2 CAR Total CAR YTD movement in Tier 1 Capi
Slide 7: Shareholder return metrics have reduced for 9MFY17
Shareholder return metrics have reduced for 9MFY17 Return on Assets (in %) Return on Equity (in %) 1.78 1.83 1.70 1.72 20.51 18.23 18.57 17.49 0.58 6.30 FY13 FY14 FY15 FY16 9MFY17* FY13 FY14 FY15 FY16 9MFY17* Diluted EPS (`) Book Value Per Share (`) 34.93 223 228 30.85 188 26.45 163 23.77 142 13.58
Slide 8: Performance Highlights
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 8
Slide 9: Key balance sheet parameters report healthy growth
Key balance sheet parameters report healthy growth All figures in YOY growth Savings Bank Deposits CASA 27% 21% 19% 18% 20% 20% 17% 17% 18% 16% Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Advances Balance Sheet 21% 21% 21% 18% 18% 18% 17% 15% 14% 10% Dec-15 Mar-16 Jun-16 Se
Slide 10: Loan growth continues to be driven by retail
Loan growth continues to be driven by retail All figures in ` Crores Total Advances Loan Mix 10% YOY (As on December 31, 2016) 344,925 353,170 347,175 338,774 315,367 1,38,521 1,43,159 1,49,284 1,49,538 1,25,796 Corporate Retail 45% 43% 41,186 44,869 43,611 45,857 43,208 SME 1,48,385 1,55,384 1,58,1
Slide 11: Deposit franchise was aided by demonetisation during last quarter
Deposit franchise was aided by demonetisation during last quarter All figures in ` Crores Savings Bank Deposits Current Account Deposits 9% YOY 27% YOY 63,652 1,18,072 62,122 1,05,793 1,07,839 1,00,185 58,379 92,758 55,229 53,564 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
Slide 12: Impact of Demonetisation in Q3 FY17
Impact of Demonetisation in Q3 FY17 All figures in ` Crores We saw significant increase in amount of Transactions at branches increased cash transactions Weekly Branch Transactions (Lakhs) Deposits Withdrawals 34.5 37.3 35.0 26.0 26.3 128 30.3 20.2 21.4 ~4.3X 100 100 2 41 8.63 Baseline Average 1 1 3
Slide 13: Performance Highlights
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 13
Slide 14: Operating Profit delivery steady even as Net Profit dipped due to provisions
Operating Profit delivery has been steady even as Net Profit has dipped due to credit provisions All figures in ` Crores Operating Revenue 19% YOY Opex to Assets 7,734 7,247 7,255 7,054 2.10% 2.06% 2.03% 1.99% 2.03% 6,500 1.92% 2,694 2,738 2,540 3,400 2,338 4,162 4,553 4,517 4,514 4,334 Q3FY16 Q4FY1
Slide 15: NIM has moderated during the quarter
NIM has moderated during the quarter Cost of Funds NIM - Global NIM - Domestic 4.24% 5.86% 5.84% 5.81% 4.04% 4.04% 5.68% 3.93% 5.51% 3.61% 3.97% 3.79% 3.79% 3.64% 3.43% 9MFY17 Global NIM is at 3.62% Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Interest Reversal on SDR/S4A 3.
Slide 16: MCLR based loans growing at expense of Base Rate linked loans
MCLR based loans are growing, at the expense of Base Rate linked loans Loan mix Advances mix by Rate type Trend in 1 year MCLR (%) 9.50 9.30 9.25 57% 50% 9.20 69% 65% 9.05 8.90 18% 0% 11% 4% 17% 17% 16% 17% Apr-16 Jul-16 Aug-16 Oct-16 Nov-16 Dec-16 14% 14% 15% 16% Mar-16 Jun-16 Sep-16 Dec-16 Foreign
Slide 17: Overall fees have contracted but granularity has improved
Overall fees have contracted but granularity has improved All figures in ` Crores Fee Income Fee Composition 4% YOY Corporate Treasury & DCM SME 2,254 Transaction Banking* Retail (card) Retail (non card) 1,885 1,935 1,805 26% 29% 26% 28% 28% 1,719 14% 13% 16% 15% 17% 20% 16% 27% 26% 5% 6% 29% 10% 10
Slide 18: Performance Highlights
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 18
Slide 19: Retail Bank transaction mix change reflects the demonetisation drive
Retail Bank transaction mix change reflects the demonetisation drive Mobile Banking Transaction Volumes (Mn) Mobile Banking Spends (`Cr) 103% YOY 69% YOY 31.3 29,760 24.3 25.7 23,279 20,861 22,053 21.9 17,598 15.5 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Transaction Mix*
Slide 20: Network has been expanding at a steady pace
Network has been expanding at a steady pace New Branches Opened Employee Strength 19% YOY 56,762 154 56,098 52,398 99 102 100 105 50,135 47,876 62 31 - Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Branch Mix* ATMs 2,805 2,904 3,006 3,106 3,211 13,726 21%
Slide 21: Retail Lending growth remains steady
Retail Lending growth remains steady All figures in ` Crores Retail Advances Retail as % of Advances 19% YOY 43% 40% 41% 1,49,284 1,49,538 38% 1,43,159 33% 1,38,521 1,25,796 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-13 Mar-14 Mar-15 Mar-16 Dec-16 Retail Advances Mix Loans Against Others, 8% Home Loans,
Slide 22: Demonetisation impact varied across retail loan segments
Retail However, demonetisation has had varying impact on Assets growth different retail loan segments Property and agriculture related disbursements have been impacted 38% 38% 34% 31% 32% 29% Rural Agri related disbursements have 19% 18% taken a hit 16% 13% 12% 26% 19% 6% 4% 9% Total Auto CV Loans P
Slide 23: Transactions and payments businesses got significant boost post demonetisation
Transactions and payments businesses got significant boost post demonetisation All figures in Mn Credit Cards - Cards In Force Debit Cards - Cards In Force 20% YOY 41% YOY 18.5 16.3 16.8 3.1 15.4 15.5 2.8 2.6 2.4 2.2 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Cards Spends
Slide 24: Performance Highlights
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 24
Slide 25: Slippages and credit costs have reduced from Q2 peaks
Slippages and credit costs have reduced from Q2 peaks. PCR has improved during the quarter. All figures in ` Crores Movement in Gross Slippages Movement in Credit Cost* in the quarter 8,772 4.09% 3.61% 4,560 1.98% 3,638 2,082 1.02% 1,474 0.69% Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q3FY16 Q4FY16 Q1FY17
Slide 26: Gross and Net NPAs have increased in Q3FY17
Gross and Net NPAs have increased in Q3FY17 Gross NPA and Watch List (WL) Net NPA All figures in ` Crores WL 6.2% 2.18% 5.22% 2.02% 5.4% 4.17% 3.5% 1.08% GNPA 2.54% 2.8% 0.75% 0.70% 1.68% 1.67% Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Net Restructured Assets Non-Retail a
Slide 27: Most slippages in Corporate Lending were from the Watch List
Most of the slippages in Corporate Lending were from the Watch List All figures in ` Crores Watch List Outstanding Cumulative Dissolution Rate Slippages in Corporate Lending 22,628 20,295 Net Reduction in WL Outstanding 8% 11% FB Outstanding = 30% Original WL Outstanding 13,789 11,091 51.0% 92% 89%
Slide 28: Sectoral composition of Watch List
Power 49% Iron & Steel 15% AAA Infrastructure 8% Construction AA Oil and Gas 6% Cement 6% A Engineering 4% (by value) Internal Rating Mix Top 10 Sectors Infrastructure 4% Roads BBB 4% Construction Sectoral composition of Watch List other than 3% Infrastructure < BBB or Shipping 2% 96% Unrated Indust
Slide 29: Trend in non Watch List slippages
Trend in non Watch List slippages All figures in ` Crores 85% of Corporate Slippages in 9MFY17 have come from WL Net Slippages outside WL have increased# 1,631 15% 818 Watch List (WL) 411 85% Q1FY17 Q2FY17 Q3FY17 Most of the increase in net non WL Corporate Slippages (non WL) 98% of non WL corporate
Slide 30: Long term average credit cost at the bank has been 81 bps
The Long term average credit cost at the bank has Credit cost been 81 bps Trend in Credit Cost : FY03 to 9MFY17 3.29% 2.30% 1.35% Credit Cost (excluding WL) for 9MFY17 = 1.58% 0.99% 1.11% Long Term 1.11% Average* = 81bps 0.50% 0.61% 0.70% 0.54% 0.61% 0.62% 0.61% 0.02% 0.21% FY03 FY04 FY05 FY06 FY07
Slide 31: Movement in NPAs
Movement in NPA’s All figures in ` Crores Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Gross NPAs - Opening balance A 4,451 5,724 6,088 9,553 16,379 Fresh slippages B 2,082 1,474 3,638 8,772 4,560 Upgradations & Recoveries C (156) (780) (140) (1,073) (350) Write offs D (653) (330) (33) (873) (122) Gross NPAs
Slide 32: Rating profile remains stable
Rating profile remains stable Corporate Lending SME Lending 6% 7% 6% 7% 7% 11% 12% 12% 12% 11% 14% 14% 14% 13% 14% 20% 20% 22% 22% 25% 31% 30% 29% 30% 27% 64% 63% 63% 64% 64% 27% 26% 20% 22% 23% 8% 8% 8% 8% 8% 16% 15% 14% 11% 12% 8% 8% 9% 8% 7% Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Dec-15 Mar-16 Jun-16
Slide 33: Top 10 Industry concentration remains stable
Top 10 Industry concentration remains stable Industry Concentration Outstanding as on (% of total outstanding) 31st December, 2016 (%)1 Rank Sectors Non- Fund- Iron & Steel Power fund Total based based 1. Financial Companies2 5.43 13.96 7.40 6.1% 5.8% 5.6% 2. Infrastructure3 5.55 11.85 7.01 5.4% 5.3
Slide 34: Performance Highlights
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 34
Slide 35: Treasury Portfolio and Non-SLR Corporate Bonds
Treasury Portfolio and Non-SLR Corporate Bonds Investment Bifurcation Book Value* (` Crore) Category Proportion Modified Duration* Government Securities1 102,912 Held Till Maturity (HTM) 60% 6.51 Years Corporate Bonds2 24,699 Others 8,874 Available For Sale (AFS) 36% 2.96 Years Total Investments 136
Slide 36: Bank continues to lead the league tables in Debt Capital Markets
Bank continues to lead the league tables in Debt Capital Markets All figures in ` Crores Key Highlights Placement & Syndication of Debt Issues Acted as arranger for some of the major PSUs 44% YOY and Corporates during the quarter. 1,37,577 Received the award for India Bond House - 2016 by IFR As
Slide 37: We have a small, strategic international network
We have a small, strategic international network UK3 Shanghai1 DIFC1,Dubai2 Dhaka2 HongKong1 & Abu Dhabi2 Colombo1 Singapore1 1 – Overseas Branches; 2 – Overseas Representative offices; 3 – wholly-owned subsidiary Trend in overseas total assets (USD bn) Value Proposition Wholesale Banking solution
Slide 38: Shareholding Pattern (as on 31st December, 2016)
Shareholding Pattern (as on 31st December, 2016) General Insurance Others Corp & Others 12.11% 3.52% Foreign Institutional Investors 47.22% Life Insurance Corporation 13.85% SUUTI 11.49% GDR's 4.37% Indian Institutions 7.40% Share Capital `478 crores Shareholders’ Funds `53,979 crores Book Val
Slide 39: The Bank continues to earn accolades from the external community
The Bank continues to earn accolades from the external community Excellence in Corporate Bank of the Year in India Social Responsibility – The Banker Awards 2016 Best Bank in India for Best Digital Bank 2016 Best Domestic Bank in Quantitative Research Business Today-KPMG Study India 2016 39
Slide 40: Thank You
Thank You 40