Axis Bank Limited · NSE:AXISBANK
Axis Bank — Axis Capital Conference, May 2019
23 slides from Axis Bank's conference presentation, May 2019
Slide 1: Positioned for growth in a challenging market
Positioned for growth in a challenging market Axis Capital Conference, May 2019 NSE: AXISBANK BSE: 532215 LSE (GDR): AXB
Slide 2: Macro-Economic indicators point towards a tough market environment
Macro-Economic indicators point towards a tough market environment … 2
Slide 3: FY19 GDP growth slowdown, capex contraction, moderate expected inflation
FY19 GDP growth slowdown, capex contraction, moderate expected inflation, will provide space for monetary easing GDP Growth Industrial Growth YoY% % 8.4% Contribution to IIP (%) 12% 8% 7.0% 6.5% 10% 5.3% 6% 4.8% 4.6% 4.5% 8% 3.8% 8.0% 8.2% 4% 2.5% 7.4% 7.2% 6% 7.0% 6.4% 1.4% 0.2% 5.5% 2% 0.1% -0.1%
Slide 4: Tight liquidity conditions have kept lending rates high
Tight liquidity conditions have kept lending rates high, flow of financial resources slower despite rising bank loan growth All figures in ` Trillion Bank lending rates Flow of Financial Resources to the Commercial Sector 11.0 9.5 10.5 9.0 20.4 18.6 10.0 8.5 3.4 (17%) 3.2 14.6 (17%) 9.5 9.7% 8.0 2.8
Slide 5: The Axis Bank Story – Recent Performance
The Axis Bank Story – Recent Performance 5
Slide 6: Over the last 10 years, Axis Bank has built an enviable franchise
Over the last 10 years, Axis Bank has built an enviable franchise Balance Sheet CASA Deposits Advances Branches ` crore ` crore ` crore 8,00,997 50% retail 4,050 5x 4x 2,43,394 6x 4x 4,94,798 20% retail 1,47,722 50,644 827 81,557 FY09 FY19 FY09 FY19 FY09 FY19 FY09 FY19 Credit Cards Operating Profit
Slide 7: The Bank has become increasingly Retail over these years
The Bank has become increasingly Retail over these years All numbers in ₹ bn Share of Retail in Deposits Share of Retail in Advances Share of Retail in Fee Income Retail Deposits* CAGR^ 17% Retail Advances CAGR^ 25% Retail Fees CAGR^ 21% 84% 81% 81% 81% 78% 75% 68% 61% 55% 50% 50% 45% 47% 43% 45% 40
Slide 8: The Retail Lending business has been built steadily and is now well diversified
The Retail Lending business has been built steadily and is now well diversified All figures in ` Crores Retail Advances have shown strong growth… …with significant dispersion in mix over time 3% 2% 10% 9% 8% 9% 8% 25% CAGR* 12% 6% 1% 2% 3% 2% 3% 4% 3% 6% 2% 4% 5% 7% 7% 8% 8% 6% 8% 9% 11% 7% 2,45,812
Slide 9: The Cards business of the Bank has been a huge success
The Cards business of the Bank has been a huge success over the last few years Featured Cards Credit Cards in Force – Market Share* 12.7% 11.5% 10.6% 7.7% 8.4% 6.5% 5.0% Co-branded Cards Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Market share has more than doubled over the last 6 years Credit
Slide 10: However, the last 2-3 years have been extremely challenging for the Bank
However, the last 2-3 years have been extremely challenging for the Bank All figures in ` Crores Gross Slippages Provision for non-performing assets* 16,599 33,419 11,157 10,221 21,782 13,871 3,800 7,345 1,789 2,548 2,854 1,179 1,296 2,023 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY13 FY14 FY15 FY16 FY17
Slide 11: During FY19, the Bank crossed the inflection point on this tough journey
During FY19, the Bank crossed the inflection point on this tough journey All figures in ` Crores Gross and Net NPA ratios have moderated Profit after tax improved in FY19 6.77% 8,224 7,358 5.04% 5.26% 6,218 5,179 4,677 3.40% 3,679 2.11% 2.06% 1.67% 1.22% 1.34% 1.06% 0.70% 0.32% 0.40% 0.44% 276 Mar-1
Slide 12: The asset quality challenges of recent years have largely been overcome
The asset quality challenges of recent years have largely been overcome BB & Below pool size has been shrinking Credit cost has moderated Provision Coverage ratio is now at 77% 300 00 7.3% 8.0 % As a % of Gross Customer Assets 79% 78% 78% 3.57% 72% 250 00 6.0 % 4.7% 77% 2.82% 200 00 4.0 % 65% 65% 1.
Slide 13: On an incremental basis, credit underwriting has been significantly more conservative
On an incremental basis, credit underwriting has been significantly more conservative Fresh originations are predominantly from Concentration Risk has reduced significantly entities rated A- or better from peak Percentage of sanctions rated A- & above Exposure to Top 20 single borrowers as a % of Ti
Slide 14: We have also started focusing rigorously on the cost efficiency of our business
We have also started focusing rigorously on the cost efficiency of our business All figures in ` Crores Opex to assets ratio moderated in FY19… … resulting in positive jaws after a 2 year gap Opex to Average Assets 21% 19% 18% Positive 17% 16% Jaws 15% 2.22% 14% 2.21% 16% 2.17% 14% 2.15% 13% 2.13% 1
Slide 15: Slow but noticeable improvement in shareholder return metrics
All this has resulted in a slow but noticeable improvement in shareholder return metrics Return on Assets (in %) Return on Equity (in %) 1.83 18.23 18.57 1.78 1.72 17.49 8.09 0.65 7.22 0.63 0.04 0.53 FY14 FY15 FY16 FY17 FY18 FY19 FY14 FY15 FY16 FY17 FY18 FY19 Diluted EPS (`) Book Value Per Share (`)
Slide 16: The Axis Bank Story – Strategy for FY20-22
The Axis Bank Story – Strategy for FY20-22 16
Slide 17: Three vectors of our strategy for the next three years
Three vectors of our strategy for the next three years rowth rofitability ustainability • Grow deposits in line with loans • Optimize business mix • Strengthen the Core - technology, operations, credit risk and process • Step up growth in Wholesale Bank • Improve operating efficiency excellence • Co
Slide 18: The ROE path back to 18% would be driven by three elements
The ROE path back to 18% would be driven by three elements ROE 3 drivers of the return to 18% ROE 19.7% 18% Risk normalization 1 Reduce credit cost below long term average 8.1% Business mix optimization 2 Portfolio choices based on RaRoC Improvement in Operating efficiency Avg FY11-15 FY19 Medium te
Slide 19: We have re-organized the Wholesale Bank, creating an integrated franchise
We have re-organized the Wholesale Bank, creating an integrated franchise Re-Oriented Coverage Groups Focused Segmental Large Corporate Mid Corporate Commercial Banking Coverage Bank and Subsidiary Products Liabilities and Transaction Credit Treasury Banking Strengthened Operations and Service Infra
Slide 20: Tightly integrating the key subsidiaries of the Bank
We are also tightly integrating the key subsidiaries of the Bank and investing in scaling them as key value drivers • Has been the leader in Equity and Equity linked deals over the last decade • Axis Bank was one of the three entities allowed by RBI to set up the Trade Receivables Discounting • Offe
Slide 21: In Summary
In Summary Axis Bank has built an enviable franchise over the last 10 years However, the last 2-3 years have been extremely challenging for the Bank During FY19, the Bank crossed the inflection point on this tough journey Amidst tough macro environment, the Bank remains positioned for growth We rema
Slide 22: 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 23: Thank You
AXIS BANK KKVAiAX'S BANK Thank You