Axis Bank , India's third-largest private sector lender, has set an ambitious goal to achieve steady double-digit growth in both deposits and loans, while also reporting growth in its second quarter results. The bank plans to leverage digital innovation and payment services as key drivers to boost revenue and improve return on equity.

Growth Strategy and Q2 Performance

Axis Bank's strategy focuses on digital innovation and payment services to drive growth. This aligns with their recent performance, as the bank has shown robust loan growth, with advances increasing by 12% year-over-year to ₹11,16,703.00 crores as of September 30.

The bank's CEO stated that recent RBI policies are expected to further boost credit growth. In response to RBI advice, the bank has added more funds for two crop loan variants, demonstrating its commitment to agricultural lending and focus on rural and semi-urban markets.

Asset Quality and Financial Highlights

During a recent RBI inspection, no issues were found in the bank's asset quality, reflecting prudent risk management practices. Key financial highlights include:

• Net Interest Income (NII) grew by 2% year-on-year to ₹13,745.00 crores
• Fee income increased by 10% year-on-year to ₹6,037.00 crores
• Operating profit stood at ₹10,413.00 crores, down 3% year-on-year
• Net profit decreased by 26% year-on-year to ₹5,090.00 crores

Deposit and Advances Growth

The bank reported strong growth in both deposits and advances:

Digital Banking and Customer Base

Axis Bank continues to strengthen its digital banking capabilities:

• Mobile banking transaction volumes grew by 22% year-on-year
• 97% of financial transactions by individual customers were digital in Q2
• The bank's customer base expanded to approximately 54 million

Capital Adequacy and Liquidity

The bank maintains a strong capital position with a Capital Adequacy Ratio (CAR) of 16.55% and a CET1 ratio of 14.43% as of September 30. The bank also holds excess SLR of ₹101,012.00 crores, ensuring ample liquidity.

Future Outlook and Strategic Moves

Axis Bank officials have indicated that bank margins may reach their lowest point in Q3 without additional rate cuts, suggesting potential pressure on profitability. The bank is also working on selling its stake in Axis Finance, with plans for it to transition into a top-tier NBFC and go public.

The bank expects minimal impact from the shift to Expected Credit Loss (ECL) provisioning, demonstrating confidence in its risk management practices.

Amitabh Chaudhry, MD & CEO of Axis Bank, commented: "This quarter, we continued to push ourselves as an institution to deliver meaningful progress. From enhancing digital safety to expanding access to credit and empowering entrepreneurs, our innovations are designed to serve real needs with precision and scale."

As Axis Bank pursues its goal of double-digit growth through digital innovation and payment services, it remains well-positioned for sustainable growth in the coming quarters, despite potential short-term margin pressures and ongoing global economic uncertainties.

Axis Bank , one of India's leading private sector banks, reported strong momentum in advances and deposits for the September quarter, despite a decline in net profit due to a one-time provision.

Key Financial Highlights

• Net Interest Income (NII) rose 1% quarter-on-quarter and 2% year-on-year
• Net Interest Margin stood at 3.73%
• Overall advances grew 12% year-on-year and 5% quarter-on-quarter
• Retail loans increased by 6% year-on-year
• Corporate loans rose 20% year-on-year
• Total deposits grew 11% year-on-year

One-Time Provision Impact

The bank made a one-time standard asset provision of ₹1,231 crore following RBI's annual inspection related to two discontinued crop loan products. This provision significantly impacted the quarterly profit.

Asset Quality

• Net slippages decreased to ₹280 crore from ₹1,861 crore in the previous quarter, indicating improved asset quality management

Business Growth and Operational Performance

Axis Bank showed robust growth in its core business areas:

• Corporate loan book grew 20% year-on-year
• Retail loans increased by 6% year-on-year
• SME loans expanded by 19% year-on-year

Management Focus

The bank's management emphasized focus on:

1. Deposit growth
2. Credit growth
3. Asset quality
4. Cost efficiency

Subsidiary Update

Axis Bank's subsidiary, Axis Finance, may be classified as an Upper Layer NBFC under RBI's regulatory framework when it crosses certain thresholds. However, no specific timeline was provided for this potential classification.

Outlook

Despite the one-time provision impacting the quarterly profit, Axis Bank's core performance indicators remain strong. The bank's focus on deposit and credit growth, improving asset quality, and cost efficiency positions it well for future growth in a competitive banking landscape.

The strong momentum in advances and deposits, along with decreased net slippages, demonstrates the bank's resilience and effective management strategies. The potential classification of Axis Finance as an Upper Layer NBFC also indicates the growing significance of the bank's subsidiaries in its overall business model.