quarterly earnings presentation - axis bank...quarterly earnings presentation q2 fy17 1 except for...

Quarterly Earnings Presentation

Q2 FY17

1

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”,

“future”, “objective”, “goal”, “strategy”, “philosophy”, “project”, “should”, “will pursue” and

similar expressions or variations of such expressions may constitute "forward-looking

statements". These forward-looking statements involve a number of risks, uncertainties and

other factors that could cause actual results to differ materially from those suggested by the

forward-looking statements. These risks and uncertainties include, but are not limited to

our ability to successfully implement our strategy, future levels of non-performing loans,

our growth and expansion, the adequacy of our allowance for credit losses, our provisioning

policies, technological changes, investment income, cash flow projections, our exposure to

market risks as well as other risks. Axis Bank Limited undertakes no obligation to update

forward-looking statements to reflect events or circumstances after the date thereof.

Safe Harbor

2

Performance Highlights

Growth

Earnings Quality

Retail Franchise

Asset Quality

Other important information

3

Net Profit

Net Interest Income

Fee Income

Advances1

Deposits1

CASA1

83% YOY

11% YOY

7% YOY

18% YOY

17% YOY

19% YOY

Summary of Key Metrics for Q2FY17

4

Return on Equity

NIM

GNPA 1

PCR 1

2.43%

1 as on 30th September, 2016

3.64%

4.17%

60%

42% 43%

Advances 18% YOY

13% YOY

45%

Retail Franchise registered strong performance

Retail Advances Retail Fee Income

Earnings Profile

25% YOY 17% YOY

Operating Revenue `7,054 crores

16% YOY

Operating Profit `4,100 crores

Return on Assets** Return on Equity**

CASA 19% YOY

SA Deposits 20% YOY

Tier I CAR*

12.03% 15.20%

Well capitalised

Total CAR*

Profit under stress due to asset quality. However operating parameters continue to perform well..

5

0.23% 2.43%

Deposits 17% YOY Fee Income 7% YOY

*Including unaudited Net Profit for H1FY17; ** annualised

Capital adequacy remains strong

6

12.21% 12.35% 12.51% 12.38% 12.03%

3.21% 3.12% 2.78% 3.29% ** 3.17%

15.42% 15.47% 15.29% 15.67% 15.20%

Sep-15* Dec-15* Mar-16 Jun-16* Sep-16*

Tier 1 CAR Tier 2 CAR Total CAR

* including unaudited Net Profit for the quarter / half year / nine-months ** includes `2,430 crores mobilized through issuance of subordinated debt during Q1FY17

22 bps YOY

YTD movement in Tier 1 Capital Adequacy Ratio

Trend in Capital Adequacy Ratio

12.51% 12.03% 0.48% 0.81% 0.15%

Mar-16 H1-Profit RWA Growth Risk weight change onunrated claims

Sep-16

142 163

188

223 225

Mar-13 Mar-14 Mar-15 Mar-16 Sep-16

Book Value Per Share (`)

20.51 18.23 18.57

17.49

7.29

FY13 FY14 FY15 FY16 H1FY17*

Return on Equity (in %)

Shareholder return metrics have reduced in H1FY17

7 * annualised

1.70 1.78 1.83 1.72

0.70


Return on Assets (in %)

23.77 26.45

30.85

34.93

15.59


Diluted EPS (`)


Growth

Earnings Quality

Retail Franchise

Asset Quality


8

We have delivered strong growth on key balance sheet parameters

9

12%

16%

20%

18%

20%

Sep-15 Dec-15 Mar-16 Jun-16 Sep-16

Savings Bank Deposits

13%

17% 17%

18% 19%


CASA

All figures in YOY growth

20%

18%

14%

18% 17%


Balance Sheet

23%

21% 21% 21%

18%


Advances

1,38,550

1,58,029

Sep-15 Sep-16

Corporate Advances

14% YOY

10

Loan Mix (As on September 30, 2016)

Diversified loan mix with growth driven by retail All figures in ` Crores

1,38,550 1,48,385 1,55,384 1,58,155 1,58,029

40,068 41,186 44,869 43,611 45,857

1,19,448 1,25,796

1,38,521 1,43,159 1,49,284


Corporate SME Retail

3,53,170

3,15,367 3,38,774

Total Advances

Corporate 45%

SME 13%

Retail 42%

40,068 45,857

Sep-15 Sep-16

SME Advances

14% YOY

1,19,448

1,49,284

Sep-15 Sep-16

Retail Advances

25% YOY

3,44,925

18% YOY

2,98,066

Deposit franchise continues to be robust

11 *as % of total deposits

89,717 92,758 1,05,793 1,00,185

1,07,839


Savings Bank Deposits

20% YOY

53,692 53,564

63,652

55,229

62,122


Current Account Deposits 16% YOY

1,15,194

1,20,352 1,21,955

1,30,357

1,36,099


Retail Term Deposits 18% YOY

44% 43% 47% 43% 45%

80% 79% 81% 80% 81%


Trend in CASA and Retail Term Deposits

CASA

CASA+RTD

All figures in ` Crores

*

*

56%

95%

14%

22% 3%

Mar'06 LDR Increase inoverseasportfolio

Decrease inInvestments

Change in liabilitymix

Mar'16 LDR

Asset mix change Driven by more advances, lesser

investments and partly by lower SLR

Long term trend in Loan to Deposit Ratio (1/2)

12

56%

63%

68% 69%

74% 75% 77% 78%

82%

87%

95% 93%

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 H1FY17

Loan to Deposit Ratio (LDR)

Drivers of movement in Loan to Deposit Ratio

• Overseas operations of the Bank

commenced in 2006

• Overseas business is largely funded by

borrowings

• Overseas portfolio peaked at 13% of total

assets in December 2013

LDR

Trend in long term Liability Mix and Liquidity Coverage Ratio (2/2)

13

92% 89%

108%

Mar 16 June 16 Sep 16 Dec 16 Mar 17 Mar 18 Mar 19

Actual LCR

Liquidity Coverage Ratio (LCR) remains well above regulatory requirements

32% 32%

11%

23% 2%

5%

1%

3%

6%

10%

8%

3%

40%

24%

FY06 FY16

CASA

Refinance & Infra Bonds

RTD

Hybrid Capital

Wholesale Borrowings

Other liabilities

Capital & Reserves

Share of Retail Term deposits (RTD) has increased, while wholesale borrowings has decreased

Liability Mix

*Wholesale borrowings comprises of NRTD, Short Term Borrowings & Overseas Borrowings

Significant reduction in Wholesale Borrowings and Other Liabilities

100%

90%

80%

70%

LCR Requirement

LCR


Growth

14

Earnings Quality

Retail Franchise

Asset Quality


3,628 3,985

4,399 4,469

4,100

Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17

Operating Profit and Operating Profit Margin

13% YOY

3.11% 3.29%

3.43% 3.41%

2.95%

3,894

1,875

H1FY16 H1FY17

Operating Profit delivery has been steady even as Net Profit has dipped due to credit provisions

15

4,062 4,162 4,553 4,517 4,514

2,041 2,338 2,694 2,738 2,540


Operating Revenue

Net Interest Income Non-Interest Income

6,103 6,500

7,247 7,255

16% YOY

7,054


2.10% 2.03% 2.06%

1.99% 1.92%

2.13%

FY12 FY13 FY14 FY15 FY16 H1FY17*

Opex to Assets

1,916

319

Q2FY16 Q2FY17

52% YOY

Net Profit

83% YOY

* annualized

NIM has moderated during the quarter

16

5.99% 5.86% 5.84% 5.81% 5.68%


Cost of Funds

3.85% 3.79% 3.97%

3.79% 3.64%

4.11% 4.04% 4.24%

4.04% 3.93%


NIM - Global NIM - Domestic

H1FY17 Global NIM is at 3.71%


Movement in NIM

4,062 4,162

4,553 4,517 4,514


Net Interest Income 11% YOY

3.64% 0.32%

0.10% 3.85%

0.21%

Q2 FY 16 Yield onAssets

Cost ofFunds

InterestReversal

Q2 FY 17

Unfavourable Favourable

Fee growth has moderated but Granular fees continue to grow

17


1,813 1,885

2,254

1,719

1,935


Fee Income

7% YOY

Corporate, 25% Treasury &

DCM, 1%

SME, 5%

Transaction Banking, 26%

Retail, 43%

Fee Composition

17%

9% 8%

-4%

Retail SME Transcn. Banking Corporate Credit

Fee Growth (YOY)

25% 26% 25% 26% 25%

64% 64% 64% 69% 69%


Trend in Granular and Corporate Fees

Corporate fees

Granular fees**

**Retail + Transaction Banking Fee as % of total fee income


Growth

Retail Franchise

Asset Quality


18

Earnings Quality

48% 49% 51% 52%

54%

38% 37% 36% 36%

34%

14% 14% 13% 12% 12%


Transaction Mix*

Digital

ATM

Branches

Retail Bank has market leading digital capabilities

19

10,566

17,598

20,861 22,053

23,279


Mobile Banking Spends (`Cr)

32%

6% -1%

18%

Digital ATM Branches Total

Transaction Volume Growth YOY

* Based on all financial transactions by individual customers

120% YOY

3.4%

13.2%

Deposits Mobile transactions (by value)

Market Share*

* Source : RBI as on March 2016

46,366 47,876 50,135

52,398 56,098


Employee Strength

We have also been opening new branches with renewed pace

20

84

52

31

-

154

62

99 102 100

Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17

New Branches Opened

25% 26% 26% 27% 27%

24% 23% 24% 24% 24%

30% 30% 30% 30% 30%

21% 21% 20% 19% 19%


Branch Mix*

Metro Urban Semi-Urban Rural

3,106 2,743 2,805 2,904

12,352

12,631 12,743

12,871

13,448


ATMs

3,006

* Includes extension counters

9,732

YOY

33%

38% 40% 41% 42%

Mar-13 Mar-14 Mar-15 Mar-16 Sep-16

Retail as % of Advances

Retail Lending continues to grow steadily

21

1,19,448 1,25,796 1,38,521 1,43,159 1,49,284


Retail Advances

25% YOY


Home Loans, 45%

Retail Agri Lending, 15%

Loans Against Property, 9%

Auto Loans, 9%

Personal Loans &

Credit Cards, 12%

Others, 10%

Retail Advances Mix • Sourcing strategy focused on internal customer

base of the Bank

• 72% of sourcing in Q2 was from existing customers

• 94% of Credit Card and 83% of Personal Loan

originations in the quarter were from existing

customers

• 49% of overall sourcing was through Bank branches

• FCNR deposit linked retail assets at `6,724 crores

included in others

7,526

10,453

255 297

0

100

200

300

400

500

600

700

800

900

1,000

0

2,000

4,000

6,000

8,000

10,000

12,000


Cards Spends

39% YOY

Payments businesses continue to drive deep customer engagement

22

14.1 14.5

15.5

16.3

16.8


Debit Cards - Cards In Force

19% YOY

Credit and Debit Cards, ` Cr

Forex Cards, USD Mn (RHS)

All figures in mn

2.0 2.2

2.4 2.6

2.8


Credit Cards - Cards In Force

Strong positioning in the payments space

17% YOY

1 – based on cards issued; 2 – based on card spends

40% YOY

*Based on RBI data as on July 2016 except for Forex Cards

Product Market share* Ranking*

Credit Cards1 10.3% 4th

Debit Cards2 5.8% 4th

Forex Cards 45% 1st

Merchant Acquisition

18.7% 3rd


Growth

Asset Quality


23

Earnings Quality

Retail Franchise

Gross and Net NPAs have increased in Q2FY17

24

1.38% 1.68% 1.67%

2.54%

4.17%

6.2%

5.4%

3.5%


Gross NPA and Watch List (WL)

GNPA

2.65%

2.31% 2.25%

1.99%

1.74%


Net Restructured Assets (% of Net Customer Assets)

0.48% 0.75% 0.70%

1.08%

2.02%


Net NPA

81% 79% 78% 78% 72%

60%

Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Sep-16

Provision coverage ratio

WL


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 - closing balance E = A+B-C-D 4,451 5,724 6,088 9,553 16,379

Provisions incl. interest capitalisation F 2,907 3,210 3,566 5,543 8,618

Net NPA G = E-F 1,544 2,514 2,522 4,010 7,761

Accumulated Prudential write offs 3,151 3,717 3,627 3,547 2,901

Provision Coverage Ratio* 78% 72% 72% 69% 60%

Movement in NPA’s


For Loan losses 619 626 906 1,823 3,648

For Standard assets** 15 71 258 238 (22)

For SDR accounts - - 22 71 9

For Investment depreciation 72 (15) - (18) (37)

Other provisions 1 31 (17) 3 25

Total Provisions & Contingencies (other than tax) 707 713 1,169 2,117 3,623


Details of Provisions & Contingencies charged to Profit & Loss Account

* including prudential write-offs ** including unhedged foreign currency exposures

25

22,628

13,789

315 32

2,680

149 694

7,288

61

Mar-16 Devolvementof NFB

Movementin Balances

Slippageinto NPA

Exitout of WL

Sep-16

Watch List Activity, H1FY17 Q2 Q1

Most of the slippages in Corporate Lending were from the Watch List

26

22,628 20,295

13,789

2,626 2,562 1,899

Mar-16 Jun-16 Sep-16

Watch List Outstanding


FB Outstanding

NFB Outstanding

Slippages in Corporate Lending Cumulative Dissolution Rate

Net Reduction in WL Outstanding

Original WL Outstanding =

92% 89%

8% 11%

Q1FY17 Q2FY17

Non- Watch list

Watch list

10.3%

39.1%

Jun-16 Sep-16

27

Sectoral composition of Watch List Top 10 Sectors

3%

97%

AA

A

AA A

BB

B

< B

BB

or

Un

rate

d

Internal Rating Mix (by value)

With significant slippage from Iron & Steel and Textile Sector, the remaining Watch List portfolio is now dominated by Power

41%

13% 12% 8%

5% 4% 3% 3% 2% 2%

Po

wer

Oil

and

Gas

Iro

n &

Ste

el

Infr

astr

uct

ure

Co

nst

ruct

ion

Ce

me

nt

Ind

ust

rial

s

Engi

nee

rin

g

Infr

astr

uct

ure

Ro

ads

Co

nst

ruct

ion

oth

er t

han

Infr

astr

uct

ure

Tele

com

1.11%

2.30%

0.02%

0.50%

0.21%

0.61%

0.99%

1.35%

0.70%

0.54% 0.61% 0.62% 0.61%

1.11%

3.05%

FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 H1FY17

Trend in credit cost : FY03 to H1FY17

The Long term average credit cost at the bank has been 81 bps

28

Long Term Average* = 81bps

* For the period from FY03 to FY16

Credit Cost (excluding WL) for H1FY17 = 0.89%

Credit

cost

The business mix and quality has changed materially after 2012

29

29%

42%

18%

13%

54% 45%

FY12 H1FY17

Retail

SME

Corporate

283% 287%

209% 155% 154% 162% 142% 152%

Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Sep-16

Exposure* to Top 20 single borrowers as a % of Tier I Capital

Concentration Risk is reducing …

57%

69% 73% 75%

85% 92%

FY12 FY13 FY14 FY15 FY16 H1FY17

% of Top 20 exposure* rated A or better

…and it is to better quality borrowers

The portfolio is now more Retail

* Includes fund based and non fund based

RiskMgt

24%

14% 15%

20% 16%

7%

FY12 FY13 FY14 FY15 FY16 H1FY17

Corporate loan sanctions post 2012 have been of much better quality

30

100

31

48

28

FY12 FY13 FY14 FY15

Year of Sanction

30+ days delinquency in first 2 years

Recent sanctions have been biased towards better rated corporates …

68% 74%

81% 79% 79% 80%

FY12 FY13 FY14 FY15 FY16 H1 FY17

Percentage of sanctions rated A- & above

… and away from challenged sectors*

… Resulting in much better credit quality for post-2012 sanctions

* sanctions to power, iron and steel, and other infrastructure construction (excluding airports, roads and ports) as a percentage of total sanctions for the year

Figures indexed to 100 in FY12

RiskMgt

31

Rating profile remains stable

11% 11% 12% 16% 15%

28% 27% 26% 20% 22%

31% 31% 30% 30% 29%

18% 20% 20% 22% 22%

12% 11% 12% 12% 12%


AAA AA A BBB <BBB or unrated

63% of corporate advances have rating of at least ‘A’ in September 2016

7% 8% 8% 9% 8%

8% 8% 8% 8% 8%

64% 64% 63% 63% 64%

15% 14% 14% 14% 13%

6% 6% 7% 6% 7%


SME 1 SME 2 SME 3 SME 4 SME 5-7

84% of SME advances have rating of at least ‘SME3’ in September 2016

Corporate Lending SME Lending

Top 10 Industry concentration has undergone minor change

Rank Sectors

Outstanding as on

30th September, 2016 (%)1

Fund-based

Non-fund

based Total

1. Infrastructure2 6.91 10.52 7.74

2. Financial Companies3 5.09 13.20 6.94

3. Engineering & Electronics 3.08 18.34 6.56

4. Power Generation & Distribution

5.79 3.93 5.36

5. Other Metal and Metal Products

3.86 2.82 3.63

6. Iron & Steel 3.34 2.61 3.17

7. Trade 3.17 3.14 3.17

8. Real Estate 3.02 1.44 2.66

9. Telecommunication4 0.69 9.32 2.66

10. Petroleum & Petroleum Products

0.78 8.82 2.61

1 Percentages stated above are on the total fund and non-fund based outstanding across all loan segments 2 Financing of projects (roads, ports, airports, etc.)

3 Includes Housing Finance Companies and other NBFCs 4 Telecommunication included in Top 10 and Food Processing has exited 32

3.5% 3.5% 3.4% 3.4% 3.2%

6.0% 6.1%

5.8% 5.6% 5.4%


Industry Concentration

Iron & Steel Power

(% of total outstanding)


Growth


33

Earnings Quality

Retail Franchise

Asset Quality

Treasury Portfolio and Non-SLR Corporate Bonds

Investment Bifurcation Book Value* (` Crore)

Government Securities1 92,196

Corporate Bonds2 23,852

Others 8,542

Total Investments 124,590

Category Proportion Modified Duration*

Held Till Maturity (HTM) 57% 6.67 Years

Available For Sale (AFS) 33% 3.24 Years

Held For Trading (HFT) 11% 2.47 years

* as on 30th September2016 1 75% classified under HTM category 2 89% classified under AFS category

* For SLR & Corporate Bonds as on 30th September 2016

20% 16% 13% 8% 6%

1% 1% 1%

8% 8% 12% 12%

10%

29% 28% 23% 33%

24%

43% 48% 51% 46% 59%


93% of Corporate bonds have rating of at least ‘A’ in September 2016

AAA AA A BBB <BBB or Unrated34

Bank continues to lead the league tables in Debt Capital Markets

Key Highlights Placement & Syndication of Debt Issues

Dominant player in placement and syndication of

debt issuances

Best Domestic Bond House in India- 2016 by

Finance Asia (20th Anniversary - Platinum award)

Best DCM House in India - 2016 by Finance Asia

Top Bank in Corporate Bonds, India, Rank 1 &

Investors Choice for primary issues in Corporate

Bonds, India-2016 by Asset Benchmark Research

35

30% YOY


64,967

82,408

H1FY16 H1FY17

27% YOY

We have a small, strategic international network

36

Colombo1 Singapore1

HongKong1

UK3

Shanghai1

Dhaka2 DIFC1,Dubai2

& Abu Dhabi2

1 – Overseas Branches; 2 – Overseas Representative offices; 3 – wholly-owned subsidiary

7.5 8.1 8.1

8.9 8.7

10% 11% 10% 11%

10%


Trend in overseas total assets (USD bn)

as % of total assets

Value Proposition

Wholesale Banking solutions comprises of cross border

financing, trade finance, forex hedging products

Merchant Banking, Debt Capital Market solutions to

corporate and institutional clientele

Retail solutions comprises of remittance products, other

banking and investment solutions

Shareholding Pattern (as on 30th September, 2016)

Share Capital `478 crores

Shareholders’ Funds `53,823 crores

Book Value Per Share `225

Diluted EPS - H1 `15.59

Market Capitalisation `124,676 crores (as on 24th October, 2016)

& 1 GDR = 5 shares As on September 30, 2016, against GDR issuance of 62.70 mn, outstanding GDRs stood at 20 mn

37

Foreign Institutional Investors 48.62%

Indian Institutions 6.23%

GDR's 4.19%

SUUTI 11.50%

Life Insurance Corporation

13.86%

General Insurance Corp & Others

3.52%

Others 12.08%

The Bank continues to earn accolades from the external community

Ranked amongst the Top 75

safest banks in the world

Ranked Best Domestic Bank

in India 2016

Best among Large Banks for

Digital Banking, Analytics

& Big Data

Best Corporate Payment

Project – Technology

Implementation Award 2015

38

Best Bank Award 2016

Best Bank Award 2016

Thank You

39

quarterly earnings presentation - axis bank...quarterly earnings presentation q2 fy17 1 except for...

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