Axis Bank Limited · NSE:AXISBANK
Axis Bank — Q2 FY17 Earnings Presentation
39 slides from Axis Bank's earnings presentation, October 2016
Slide 1: Quarterly Earnings Presentation Q2 FY17
Quarterly Earnings Presentation Q2 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 Q2FY17
Summary of Key Metrics for Q2FY17 83% YOY Net Profit 11% YOY Net Interest Income 7% YOY Fee Income 18% YOY Advances1 Return on Equity 2.43% NIM 3.64% 17% YOY Deposits1 GNPA 1 4.17% 19% YOY CASA1 PCR 1 60% 1 as on 30th September, 2016 4
Slide 5: Profit under stress due to asset quality; operating parameters perform well
Profit under stress due to asset quality. However operating parameters continue to perform well.. Retail Franchise registered strong performance Deposits 17% YOY Advances 18% YOY Fee Income 7% YOY 45% 42% 43% CASA 19% YOY Retail Advances Retail Fee Income 25% YOY 17% YOY SA Deposits 20% YOY Earnings
Slide 6: Capital adequacy remains strong
Capital adequacy remains strong Trend in Capital Adequacy Ratio 15.42% 15.47% 15.29% 15.67% 15.20% 22 bps YOY 3.21% 3.12% 2.78% 3.29% ** 3.17% 12.21% 12.35% 12.51% 12.38% 12.03% Sep-15* Dec-15* Mar-16 Jun-16* Sep-16* Tier 1 CAR Tier 2 CAR Total CAR YTD movement in Tier 1 Capital Adequacy Ratio 12.51
Slide 7: Shareholder return metrics have reduced in H1FY17
Shareholder return metrics have reduced in H1FY17 Return on Assets (in %) Return on Equity (in %) 1.78 1.83 1.70 1.72 20.51 18.23 18.57 17.49 0.70 7.29 FY13 FY14 FY15 FY16 H1FY17* FY13 FY14 FY15 FY16 H1FY17* Diluted EPS (`) Book Value Per Share (`) 34.93 223 225 30.85 188 26.45 163 23.77 142 15.59 F
Slide 8: Performance Highlights: Growth
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 8
Slide 9: Strong growth on key balance sheet parameters
We have delivered strong growth on key balance sheet parameters All figures in YOY growth Savings Bank Deposits CASA 20% 20% 19% 18% 18% 17% 17% 16% 13% 12% Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Advances Balance Sheet 23% 20% 21% 18% 18% 21% 21% 17% 18% 14% Sep-15 Dec
Slide 10: Diversified loan mix with growth driven by retail
Diversified loan mix with growth driven by retail All figures in ` Crores Total Advances Loan Mix 18% YOY (As on September 30, 2016) 3,44,925 3,53,170 3,38,774 2,98,066 3,15,367 1,38,521 1,43,159 1,49,284 1,25,796 Corporate 1,19,448 Retail 42% 45% 41,186 44,869 43,611 45,857 40,068 SME 1,38,550 1,48
Slide 11: Deposit franchise continues to be robust
Deposit franchise continues to be robust All figures in ` Crores Savings Bank Deposits Current Account Deposits 16% YOY 63,652 20% YOY 62,122 1,05,793 1,07,839 1,00,185 89,717 92,758 55,229 53,692 53,564 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Retail Term Deposits 18% Y
Slide 12: Long term trend in Loan to Deposit Ratio (1/2)
Long term trend in Loan to Deposit Ratio (1/2) Loan to Deposit Ratio (LDR) 95% 93% LDR 87% 82% 77% 78% 74% 75% 68% 69% 63% 56% FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 H1FY17 Drivers of movement in Loan to Deposit Ratio 3% 95% 22% • Overseas operations of the Bank 14% commenced in 2006
Slide 13: Long term Liability Mix and Liquidity Coverage Ratio (2/2)
Trend in long term Liability Mix and Liquidity Coverage Ratio (2/2) Liquidity Coverage Ratio (LCR) remains well above Liability Mix regulatory requirements Share of Retail Term deposits (RTD) has increased, LCR while wholesale borrowings has decreased Significant reduction in 24% Wholesale Borrowing
Slide 14: Performance Highlights: Earnings Quality
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 14
Slide 15: Operating Profit steady even as Net Profit dipped
Operating Profit delivery has been steady even as Net Profit has dipped due to credit provisions All figures in ` Crores Operating Revenue Opex to Assets 16% YOY 7,247 7,255 7,054 6,500 2.10% 2.13% 6,103 2.03% 2.06% 1.99% 2,694 2,738 2,540 1.92% 2,041 2,338 4,062 4,162 4,553 4,517 4,514 Q2FY16 Q3FY1
Slide 16: NIM has moderated during the quarter
NIM has moderated during the quarter All figures in ` Crores Cost of Funds NIM - Global NIM - Domestic 5.99% 4.24% 5.86% 5.84% 5.81% 4.11% 4.04% 4.04% 5.68% 3.93% 3.97% 3.85% 3.79% 3.79% 3.64% H1FY17 Global NIM is at 3.71% Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Movemen
Slide 17: Fee growth moderated but granular fees continue to grow
Fee growth has moderated but Granular fees continue to grow All figures in ` Crores Fee Income Fee Composition 2,254 7% YOY 1,885 1,935 1,813 Corporate, 1,719 25% Treasury & Retail, 43% DCM, 1% SME, 5% Transaction Banking, 26% Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Fee Growth (YOY) Trend in Granular and
Slide 18: Performance Highlights: Retail Franchise
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 18
Slide 19: Retail Bank has market leading digital capabilities
Retail Bank has market leading digital capabilities Mobile Banking Spends (`Cr) 120% YOY Market Share* 23,279 22,053 20,861 13.2% 17,598 10,566 3.4% Deposits Mobile transactions (by value) Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 * Source : RBI as on March 2016 Transaction Volume Growth YOY Transaction Mi
Slide 20: Opening new branches with renewed pace
We have also been opening new branches with renewed pace New Branches Opened Employee Strength 9,732 YOY 56,098 52,398 50,135 154 46,366 47,876 99 102 100 84 62 52 31 - Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Branch Mix* ATMs 2,743 2,805 2,90
Slide 21: Retail Lending continues to grow steadily
Retail Lending continues to grow steadily All figures in ` Crores Retail Advances Retail as % of Advances 25% YOY 41% 42% 40% 38% 1,43,159 1,49,284 1,38,521 33% 1,19,448 1,25,796 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Mar-13 Mar-14 Mar-15 Mar-16 Sep-16 Retail Advances Mix • Sourcing strategy focused on
Slide 22: Payments businesses drive deep customer engagement
Payments businesses continue to drive deep customer engagement Credit Cards - Cards In Force Debit Cards - Cards In Force All figures in mn 40% YOY 2.8 19% YOY 2.6 2.4 16.8 2.2 16.3 2.0 15.5 14.5 14.1 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Cards Spends Strong positioni
Slide 23: Performance Highlights: Asset Quality
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 23
Slide 24: Gross and Net NPAs have increased in Q2FY17
Gross and Net NPAs have increased in Q2FY17 Gross NPA and Watch List (WL) Net NPA 6.2% WL 5.4% 2.02% 4.17% 2.54% 3.5% 1.08% 1.68% 1.67% 0.75% 0.70% 1.38% 0.48% GNPA Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Net Restructured Assets Provision coverage ratio (% of Net Custom
Slide 25: Movement in NPAs
Movement in NPA’s All figures in ` Crores Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Gross NPAs - Opening balance A 4,251 4,451 5,724 6,088 9,553 Fresh slippages B 2,603 2,082 1,474 3,638 8,772 Upgradations & Recoveries C (988) (156) (780) (140) (1,073) Write offs D (1,415) (653) (330) (33) (873) Gross NPAs
Slide 26: Most slippages in Corporate Lending were from 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% Non- Watch list FB Outstanding = Original WL Outstanding 13,789 39.1% 92%
Slide 27: Watch List dominated by Power sector
With significant slippage from Iron & Steel and Textile Sector, the remaining Watch List portfolio is now dominated by Power Sectoral composition of Watch List 41% Top 10 Sectors 13% 12% 8% 5% 4% 3% 3% 2% 2% Cement Engineering Power Infrastructure Infrastructure Infrastructure Industrials Telecom Oi
Slide 28: Long term average credit cost has been 81 bps
The Long term average credit cost at the bank has been 81 bps Credit cost Trend in credit cost : FY03 to H1FY17 3.05% 2.30% 1.35% 0.99% 1.11% 1.11% Long Term Credit Cost (excluding WL) Average* = 81bps 0.61% for H1FY17 = 0.89% 0.50% 0.70% 0.54% 0.61% 0.62% 0.61% 0.02% 0.21% FY03 FY04 FY05 FY06 FY07
Slide 29: Business mix and quality changed materially after 2012
The business mix and quality has changed materially after 2012 Concentration Risk is reducing … Risk Exposure* to Top 20 single borrowers as a % of Tier I Capital Mgt The portfolio is now more Retail 283% 287% 209% 155% 154% 162% 142% 152% 45% Corporate Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-
Slide 30: Corporate loan sanctions post 2012 of better quality
Corporate loan sanctions post 2012 have been of much better quality Recent sanctions have been biased towards … Resulting in much better credit quality Risk better rated corporates … Mgt for post-2012 sanctions Percentage of sanctions rated A- & above 81% 79% 79% 80% 74% 30+ days delinquency in firs
Slide 31: Rating profile remains stable
Rating profile remains stable Corporate Lending SME Lending 6% 6% 7% 6% 7% 12% 11% 12% 12% 12% 15% 14% 14% 14% 13% 18% 20% 20% 22% 22% 31% 31% 30% 29% 30% 63% 64% 64% 63% 64% 28% 27% 26% 20% 22% 8% 8% 8% 8% 8% 11% 12% 16% 15% 11% 7% 8% 8% 9% 8% Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Sep-15 Dec-15 Mar-16
Slide 32: Top 10 Industry concentration
Top 10 Industry concentration has undergone minor change Industry Concentration Outstanding as on (% of total outstanding) 30th September, 2016 (%)1 Rank Sectors Non- Fund- Iron & Steel Power fund Total based based 1. Infrastructure2 6.91 10.52 7.74 6.1% 6.0% 5.8% 5.6% 5.4% 2. Financial Companies3 5
Slide 33: Performance Highlights: Other important information
Performance Highlights Growth Earnings Quality Retail Franchise Asset Quality Other important information 33
Slide 34: 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 92,196 Held Till Maturity (HTM) 57% 6.67 Years Corporate Bonds2 23,852 Others 8,542 Available For Sale (AFS) 33% 3.24 Years Total Investments 124,
Slide 35: Bank leads 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 Dominant player in placement and syndication of 27% YOY debt issuances 82,408 Best Domestic Bond House in India- 2016 by 64,967 Finance Asia (20th Annive
Slide 36: 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 37: Shareholding Pattern (as on 30th September, 2016)
Shareholding Pattern (as on 30th September, 2016) General Insurance Others Corp & Others 12.08% 3.52% Foreign Institutional Investors Life Insurance 48.62% Corporation 13.86% SUUTI 11.50% GDR's 4.19% Indian Institutions 6.23% Share Capital `478 crores Shareholders’ Funds `53,823 crores Book Va
Slide 38: Bank continues to earn accolades
The Bank continues to earn accolades from the external community Ranked amongst the Top 75 safest banks in the world Best Bank Award 2016 Best among Large Banks for Best Corporate Payment Project – Technology Ranked Best Domestic Bank Digital Banking, Analytics in India 2016 & Big Data Implementatio
Slide 39: Thank You
Thank You 39