AXIS BANK

Overview

Established in 1993 and commencing operations in 1994, Axis Bank has emerged as one of India’s leading financial
conglomerates, solidifying their presence across diverse economic sectors and activities. As India’s third-largest
private sector bank, its wide-ranging products and services are ready to be deployed through online and physical
delivery channels. The vision of axis bank is to be the preferred financial solutions provider excelling in customer
delivery through insight, empowered employees, and smart use of technology.

During the year, the bank has added 164 branches to its network. Around 17% of our branches are in rural India, of
which 76% are in unbanked locations. It’s overseas presence is spread across seven international offices. They have
consolidated overseas business through branches in Dubai, Singapore and GIFT City, India. Axis Bank has 4,758
Branches and Extension Counters in India. It also has 16,900+ ATMs and Cash Deposit/ Withdrawal machines and
145+ SME Centres.

Region Wise Branches(%)

Metro Semi-Urban Urban Rural

Digital Initiatives

Axis Mobile is among the highest ranked banking app on the Apple Store (rating of 4.6) and Google Play Store (rating
of 4.6). The app act digital as an enabler to power all interactions of axis bank with its consumers and swiftly move
between online and offline. Axis Virtual Centres provides omnichannel reach to meet the demands of consumers
through virtual relationship managers. Combining the best of Artificial Intelligence, Machine Learning and Natural
Language Processing, the virtual assistant, Axis AHA! facilitates intelligent and instantaneous digital conversations to
address queries on the go. This is becoming a source of competitive advantage by offering 250+ DIY services (the
highest in the industry) and covering about 65% of the branch's request volume.

Retail Banking

Domestic retail loans grew 21% in fiscal 2022 to 3,97,568 crores, driven by secured product offerings like home loans,
loan against property and small business banking − With a growth in personal loan disbursements to the salaried
segment, disbursements to unsecured products followed suite. The unsecured retail loan book will continue to grow
over the next few years owing to our strong partnerships and KTB consumer base, of over 140 million consumers −
Retail book has a healthy portfolio with GNPA at 1.43% and NNPA at 0.57% with ~80% Share of secured loans in
Retail book.

In fiscal 2022, while axis pivoted the growth in Retail book towards its identified focused segments like small business
banking and rural, they also gradually accelerated growth across personal loans and credit cards with the economic
impact of covid waning towards the latter half of year. The small business banking segment witnessed a 60% y-o-y
growth, a result of the ramp up in acquisition of new clients and a focus on providing a full suite of solutions from the
Bank to its existing clients. The growth across our unsecured loan portfolio consisting of personal loans and credit
cards too improved by 15% and 19%, respectively on a y-o-y basis as a leverage on their strong data analytics
capabilities and 39 Performance for the Year strengthened credit underwriting models to scale up distribution and
partnership channels.

Breakup of Retail Book

Mortgage Credit card and personal loan Rural Loan

Auto Loan SBB Others

Payments
Axis has added 2.67 million cards during the year, up 170% y-o-y on the back of strategic partnerships and the
growth of new liability accounts. About 28% of credit cards were acquired through ‘Known to Bank’ partnerships, up
from 21% in fiscal 2021.

The retail credit card spends were up 60% y-o-y, faster than overall industry spends, trending well above pre-COVID
levels − Since its launch in July 2019, Flipkart Axis Bank Credit Cards have become one of the fastest growing co-
branded portfolios in the industry. Axis bank is now the second-largest merchant-acquiring bank in the country with
an installed capacity of 10 lakh+ terminals, acquiring an incremental market share of 30% in fiscal 2022.

During the year, the Bank saw positive traction in credit cards market share with strong growth in acquisitions, cards
in force as well as spends. The Bank sourced 2.67 million cards in fiscal year 2022, highest ever for any year and now
has 9 million cards with market share of 12%. The credit cards business also touched the highest ever yearly spends
of `67,664 crores, yet another milestone for the business.

The Bank continued to build scale with marquee partnerships like Flipkart, Google, Airtel etc. During the year, 28%
of credit cards were acquired through KTB partnerships across Flipkart, Google Pay, Free charge and others, up from
21% in fiscal 2021 and 6% in fiscal 2020. This has not only contributed to a better portfolio with controlled risk but
has also led to higher usage and spend metrics. The Bank’s marquee card proposition ‘Flipkart Axis Bank Credit Card’,
a cobranded credit card in partnership with ecommerce giant Flipkart crossed yet another significant milestone of
2.22 million cards in force (CIF), adding over a million cards in 13 months. With a focus on facilitating fully digital card
issuances, the Bank also launched the end-to-end digital issuance journey on Flipkart Axis Bank card in November
2021. 34% cards booked on Flipkart post launch have been via the end-to-end digitization mode. During the year, the
Bank also entered into a strategic partnership with Airtel that will help it to offer credit cards and various digital
financial offerings to Airtel’s 340 million customers.
Wholesale and Corporate banking
The corporate loan book was 230,738 crores as at the end of fiscal 2022, up 4% over fiscal 2021, with a healthy mix
of 34/66 between short-term and long-term loans. The focus segments of Mid-Corporate and Commercial Banking
Group (CBG) showed impressive growth − CBG asset portfolio was `77,067 crores at the end of fiscal 2022, registering
y-o-y growth of 26%. 96% of SME book is secured and is predominantly working capital financing. The CBG asset
book remains healthy and well diversified across several geographical regions and major industrial sectors − Within
the private sector banking landscape, axis have been a pioneer in Government business offering competitive
products and solutions. The Government business segment of the Bank witnessed a robust growth in fiscal 2022.

During the year, our focussed segments like Mid-Corporate, Commercial Banking (CBG) and MNC delivered 45%, 26%
and 49% y-o-y growth. They also made significant progress towards becoming “the transaction bank of choice” for
corporates. During the year, axis has won several complex cash management mandates, undertook several industry
firsts like blockchain enabled domestic trade transaction and arranged SOFR (Secured Overnight Financing Rate)
linked trade financing deal thereby gaining market share in trade and forex business. It’s market share in foreign
Letter of Credit issuances increased by 140 bps y-o-y to 10.6%, and they continued to have strong positioning in GST
and RTGS payments with market share of over 8% each.
 Retail commands 59% of overall book CASA + RTD ratio remains broadly s
30% 60% 90%
25% 80%
58%
70%
20% 60%
56%
15% 50%
54% 40%
10%
52% 30%
5%
20%
0% 50% 10%

Q4FY22

Q1FY23
Q3FY20

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Q3FY22
0%

Overall loan growth Retail loan growth

Retail share (%)- RHS CASA CASA + R

Share of home loans remains broadly stable Moving towards high quality acc
64% 65% 64% 64% 64% 64% 63% 63% 63% 64% 64% 100%
90%
80%
70%
36% 35% 36% 36% 36% 36% 37% 37% 37% 36% 36% 60%
50%
40%
30%
20%
10%
0%
Q3FY20

Q4FY20

Q1FY21

Q2FY21

Q3FY21

Q4FY21

Q1FY22

Q2FY22

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Q1FY23

Moving towards high quality accounts

100% 100% Mov
90% 90%
80% ing
80% tow
70%
70%
60% ards
60%
50% high
40%
50%
40% qual
30%
30% ity
20%
10% 20% acco
0% 10% unts
0%
Q3FY20

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Q1FY21

Q2FY21

Q3FY21

Q4FY21

Q1FY22

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Q1FY23

CASA and Cost of Borrowing

 The total deposits of the Bank increased by 18% to `821,721 crores against `697,986 crores last year. Savings Bank
deposits reported a growth of 19% to `242,449 crores, while Current Account deposits reported increase of 12% to
`127,306 crores. As on 31 March, 2022, low-cost CASA deposits increased to `369,755 crores, and constituted 45% of
total deposits. Savings Bank deposits on a daily average basis, increased by 21% to `215,213 crores, while Current
Account deposits reported a growth of 20% to `95,965 crores. The percentage share of CASA in total deposits, on a
daily average basis, was at 43% compared to 41% last year.

As on 31 March, 2022, the retail term deposits grew 4% Y-o-Y and stood at `286,612 crores, constituting 63% of the
total term deposits. The Bank continues to focus on expanding its granular deposit base (CASA + Retail Term
Deposits) which now constitute 80% of total deposits as on 31 March, 2022.

The total borrowings of the Bank increased by 30% from `142,873 crores in fiscal 2021 to `185,134 crores in fiscal
2022. During the year Bank has raised foreign currency denominated Additional Tier I bonds amounting to US$ 600
million (Approx. `4,548 crores). During the year, the Bank redeemed Rupee denominated Additional tier I bonds
amounting to `3,500 crores. Further, during the year the Bank also raised `2,600 crores through issuance of Infra
bonds with a maturity of 7 years.

CASA + RTD ratio remains broadly stable QoQ

60% 90%
80%
58%
70%
56% 60%
50%
54% 40%
52% 30%
20%
50% 10%
0%
Q3FY20

Q4FY20

Q1FY21

Q2FY21

Q3FY21

Q4FY21

Q1FY22

Q2FY22

Q3FY22

Q4FY22

Q1FY23

CASA CASA + RTD

Financial performance Metrics

Asset quality

The asset quality metrics improved during the fiscal, with reduction in NPA ratios year on year. During the fiscal, the
quantum of low rated pool of BB and below accounts (excluding investments and non-fund exposure decreased and
stood at 5,778 crores as compared to 7,443 crores at the end of fiscal 2021. The aggregate outstanding in low rated
pool of BB and below investments and non-fund accounts was 826 crores and 2,780 crores respectively as at the end
of March 2022. The Bank added `20,110 crores to Gross NPAs during the year. The Bank’s ratio of Gross NPAs to
gross customer assets decreased to 2.82%, at the end of March 2022 from 3.70% as at end of March 2021. The Bank
added `5,760 crores to Net NPAs after adjusting for recoveries and upgradations of `3,360 crores and `10,990 crores
respectively and the Bank’s Net NPA ratio (Net NPAs as percentage of net customer assets) decreased to 0.73% from
1.05%.

Provisions and contingencies

During fiscal 2022, the Bank created provisions (other than provisions for tax) of `7,360 crores compared to `14,322
crores last year net of recoveries from written off accounts. The Bank’s recoveries from written off accounts in fiscal
2022 stood at `2,367 crores compared to `1,246 crores in fiscal 2021. The Bank’s provision coverage increased during
the fiscal and stood at 75% excluding prudential write-offs. The Bank’s accumulated prudential write off pool stood at
`36,256 crores as at end of fiscal 2022.

The bank has improved the trajectory of return ratios, delivering consolidated annualised ROE of 13.74% in fiscal
2022 as against 8.28% in fiscal 2021. Moreover, Net Interest Margin improved to 3.6% on an annualised basis from
3.47% in FY 21.

Subsidiary Performance

The subsidiaries of axis bank remain central to the principle of “One Axis’ and have an important role to play in the
Bank’s strategy formulated around the three vectors - Growth, Profitability and Sustainability. In a short span of time,
the Bank has established subsidiaries covering a significant gamut of the financial services space, with some of them
being leaders in their segments.

The Bank continues to focus on further scaling up the subsidiaries so that they attain meaningful size and market
share in their respective businesses. During fiscal 2022, the Bank’s domestic subsidiaries delivered strong
performance with PAT of `1,195 crores up 44% Y-o-Y.

Axis Capital-

Axis Capital, the Bank’s investment banking and institutional equities franchise has been the leader in equity and
equity linked deals over the last decade and had another great year with highest number of transactions (44
transactions across IPO, QIPs, OFS and Rights Issue). Axis Capital’s earning increased by 20% Y-o-Y and contributed
18% to the total earnings of the subsidiaries.

Axis AMC-
Axis AMC, that had 12.8 million client folios as at end of 31 March, 2022 reported strong growth in net profits by
47%. The company manages 62 mutual fund schemes with a closing AUM of `253,772 crores as compared to closing
AUM of `1,90,841 crores as on 31 March, 2021. Axis AMC’s earnings grew by 47% Y-o-Y to `357 crores and
contributed 31% to the total earnings of the subsidiaries.

Axis Securities-

Axis Securities, a brokerage arm become the third largest player based on customer base. The retail brokerage firm
reported 15% Y-o-Y growth in cumulative client base to 4.17 million. Axis Securities’ earnings grew 40% Y-o-Y as
compared to previous period, and contributed 20% to total subsidiaries’ earnings. The subsidiary achieved a trading
volume of `6,282,797 crores thereby registering a growth of 74% in fiscal 2022.

Axis Finance-

Axis Finance Limited, the Bank’s NBFC has been diversifying its loan book mix and has made significant investments
to grow its retail team with the objective of becoming a consumer-focused lending company. Axis Finance’s earning
increased by 72% Y-o-Y and contributed 32% to total subsidiaries’ earnings. Axis Finance remains well capitalized
with Capital Adequacy Ratio of 20%. Its asset quality metrics remain stable with net NPA declining 151 bps Y-o-Y to
0.46% as of 31 March, 2022.

Free Charge-

Free charge, one of the India’s leading digital payment companies has a current user base of 100.4 million, GMV of
`7,863 crores and 78.6 million transactions. It continued to make progress in its payments led financials services
journey during the year. The Bank leveraged the platform to introduce financial services products including digital SA,
digital CA, digital fixed deposits, MFs, credit cards and two-wheeler loans focused towards millennials and small and
medium businesses.

A.TReDs Limited- A.TReDs Limited, the Bank’s subsidiary that was set up in partnership with M-Junction, was one of
the three entities allowed by RBI to set up the Trade Receivables Discounting System (TReDS), an electronic platform
for facilitating cash flows for MSMEs. The Bank’s digital invoice discounting platform ‘Invoicemart’ has set a new
benchmark by facilitating financing of 125 Statutory Reports MSME invoices of more than `27,000 crores. It currently
has over 14,400 participants on the platform and has e-discounted nearly 10 lakh invoices since start of its operation
from July 2017.

Expansion strategy

Bharat Banking-
The increasing income diversification, evolution of the tech stack, various government schemes to improve
livelihoods, and integrating the country via roads and the internet have provided strong tailwinds to the Rural and
Semi-urban (RUSU) or ‘Bharat’ markets.

The objective is to accelerate the growth journey by expanding distribution reach via branches, partnerships, and
digital presence, creating tailored products and processes, and using the One Axis strategy to harness synergies in all
parts of the Bank to deliver to the Bharat customer. The Bank also continues to focus on growing the book profitably
by enhancing productivity, improving operational efficiency to reduce cost, and containing risk by leveraging
technology such as AI and ML & rigorous portfolio monitoring.

Burgundy proposition:

Burgundy seeks to provide its customers with the intellect of an investment house along with the solidity of a leading
bank. The customers have the choice of selecting from a range of customisable wealth management, personal
banking, business and lending solutions for their varied needs – each tailored to help them grow and preserve their
wealth.

The Burgundy Private team extensively leverages the One Axis initiative by working with: The Bank’s subsidiaries to
reach out to promoters of listed companies. The Wholesale Banking team, in particular our Mid Corporate (MC)
business and the Mid-Enterprise Group (MEG) within Commercial Banking group to identify, engage with and
onboard key private client relationships. The Bank’s New Enterprise Group (NEG) business to provide wealth-
management solutions to the promoters and enterprises from the country’s large start-up ecosystem. The Bank also
leverages its One Axis capabilities to cater to Burgundy Private customers be-spoke requirements. These includes
Estate Planning, Family Office Solutions, Real Estate Advisory, Tax & Regulatory Advisory, Structured Credit solutions
and Offshore Investments.

Digital Banking-

Digital focus has been one of the key pillars of the Bank’s GPS strategy that has led the Bank to be at the forefront of
providing cutting edge digital solutions to its customers. The Bank has built strong in-house capabilities over the last
3 years with over 1,500+ people fully dedicated to digital transformation of the Bank. The Bank also has 350+
member team in-house engineering team comprising product managers, developers, designers, digital marketing
specialists etc with over 76% of them from non-banking backgrounds such as consumer internet, fintech etc. The
Bank continues to focus on developing full stack digital foundation using advanced analytics and intelligent
automation across business operations. The Bank has set up Agile operating model with Dev-ops infrastructure and
the new customer proposition development is cloud native. The Bank’s approach to reimagining customer journeys
is OPEN.
O- Zero-based redesign, putting customers at the centre and rebuilding the entire journey with a ‘0’ operations
orientation.

P- Building Proprietary inhouse capabilities that would lead to distinctiveness and differentiation.

E- Ecosystems capable; building solutions keeping both Axis Bank and partners in mind.

N- Focus on Numbers

Project “SPARSH”: The Bank has embarked upon a distinctiveness program called “Sparsh” to drive customer
obsession in the Bank. It is a passion that drives the Bank’s aspiration to become the most customer obsessed bank
in India. This journey is aimed to build customer experience as a true differentiator for the Bank and ultimately drive
promotor scores. The core credo of Sparsh is Delight our customers and fulfill their dreams, through smart banking
every day.

As part of the broader agenda of Sparsh, the Bank has been working to empower and train its 85k+ strong staff to
become delight advocates. The Bank is also building institutional capabilities to capture the voice of the customer
and strengthening its ability to measure and act on customer feedback. The Bank has also been working to engage its
frontline staff in the ideation process, helping cement their sense of ownership, and have given public recognition for
employees who live the ‘Sparsh’ behaviours

Citibank’s consumer business acquisition:

The proposed transaction will add ~4% to the Axis Bank’s advance base, ~7% to deposits, ~12% increase in CASA and
31% addition to credit card base. Post the acquisition, Axis Bank will have ~ 28.5mn savings accounts, 0.23mn
Burgundy customers and 10.6mn cards (not adjusting for any overlap). Key will be retention of an acquired customer
base. It also gets access to relationship managers, Citi's phone banking services, experienced retail team, robust
processes and operations. Axis Bank will be able to consolidate and gain meaningful share in credit card space with
>31% addition in card base of 2.5mn and 17% increase in average card spend. Credit card receivable portfolio will
accrete by almost 57% to Rs244bn getting into the top-3 league.

The acquisition aligns well with Axis Bank’s premiumisation strategy as it gives access to a large, affluent and
profitable consumer franchise. It gets access to a sizable granular deposit base with deep corporate salary
relationships (>1,600 Suvidha corporates and 1.2mn retail customers) improving CASA ratio on a proforma basis by
couple of percentage points to ~ 47%. The acquisition is a natural fit for its wealth management franchise. It will be
able to leverage the Burgundy platform to serve an affluent customer base (40k+ affluent wealth customers and
100+ ultra HNI families). It will further strengthen Axis Bank’s franchise through 42% addition to overall Burgundy
AUM making it third-largest wealth manager by combined AUM. It has potential to cross-sell Axis Bank’s product
offering to Citibank’s affluent customer base.
Regulatory Measures announced by RBI

RBI announced an increase in the priority sector lending targets for small and marginal farmers and weaker sections,
in a phased manner, starting from fiscal 2022. The target for lending to small and marginal farmers was increased
from 8.0% of adjusted net bank credit in fiscal 2021 to 9.0% in fiscal 2022, and further to 9.5% in fiscal 2023 and to
10.0% in fiscal 2024. The target for lending to identified weaker sections of society was increased from 10.0% in fiscal
2021 to 11.0% in fiscal 2022, 11.5% in fiscal 2023 and 12.0% in fiscal 2024.

In September 2021, RBI issued directions with regard to tokenization of card transactions, and permitted card issuers
to offer card tokenisation services as Token Service Providers from January 1, 2022. Further, it was proposed that no
entity in the card transaction/payment chain, other than the card issuers and/or card networks, may store the actual
card data. Any such data stored previously was required to be purged. This was to be effective from January 22,
2022, which has been extended to September 30, 2022.

With the objective of aligning with Basel Committee on Banking Supervision (BCBS) standards to manage liquidity
risks, RBI increased the threshold limit for deposits and other extension of funds made by non-financial small
business customers from ` 50.0 million to ` 75.0 million for computation of liquidity coverage ratio (LCR) and net
stable funding ratio (NSFR).

RBI withdrew the special dispensation given to banks to avail funds under the marginal standing facility (MSF) by
dipping into the statutory liquidity ratio up to 3.0% of net demand and time liabilities (NDTL), and returned to the
normal dispensation of 2.0% of NDTL from January 1, 2022. In April 2022, RBI permitted banks to consider
government securities up to 16.0% of NDTL as level 1 high quality liquid assets (HQLA) under the Facility to Avail
Liquidity for Liquidity Coverage Ratio compared to the earlier level of 15.0%. Accordingly, the total amount within
the mandatory statutory liquidity ratio that can be considered for liquidity coverage ratio calculation was increased
from 17.0% of NDTL to 18.0% of NDTL.

Monetary Policy

In the Monetary Policy Statement announced on April 8, 2022, RBI introduced the standing deposit facility (SDF) rate
as the floor of the Liquidity Adjustment Facility (LAF) corridor, and set the rate at 3.75%, compared to the earlier
reverse repo rate as the floor of LAF. With the introduction of SDF, RBI narrowed the LAF corridor to 50 basis points
from 90 basis points earlier. The RBI indicated that the balances held by banks with the RBI under the SDF shall be an
eligible Statutory Liquidity Ratio (SLR) asset and shall not be eligible for Cash Reserve Ratio (CRR) maintenance.

On May 4, 2022, the MPC announced an increase in the repo rate by 40 basis points from 4.00% to 4.40%.
Accordingly, the SDF rate was revised to 4.15% and the marginal standing facility rate to 4.65%. The MPC continued
to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within
the target going forward, while supporting growth. In line with the decision to withdraw liquidity, the CRR was
increased by 50 basis points from 4.00% to 4.50% of net demand and time liabilities. This was effective from the
fortnight beginning May 21, 2022. On June 8, 2022, the MPC announced a further 50 basis point increase in the repo
rate to 4.90% and another tranche of 50 basis point in Aug 5. Accordingly, the SDF rate was revised to 5.15% and the
marginal standing facility rate to 5.65%.

Banking Sector Analysis

The credit offtake in the economy is the main driver for banking sector in the country. Credit off-take has been
surging ahead over the past decade, aided by strong economic growth, rising disposable incomes, increasing
consumerism and easier access to credit. During FY16-FY21, bank credit increased at a CAGR of 0.29%. As of FY21,
total credit extended surged to US$ 1,487.60 billion. Demand has grown for both corporate and retail loans. Services,
real estate, consumer durables and agriculture allied sectors have led the growth in credit. In August 2021, Barclays
announced investment of Rs. 30 billion (US$ 403.99 million) in India to expand its operations. In August 2021, RBI
developed Financial Inclusion Index (FI-Index) to measure the level of financial inclusion across the country. The FI
Index increased from 43.4 in FY17 to 53.9 in FY21. In March 2022 Bank credit grew by 8.59% and the deposits were
up by 8.94%. According to Fitch arm credit growth is expected to hit 10% in 2022-23 which will be a double-digit
growth in eight years. As on May 20, 2022, bank credit stood at Rs. 120.27 lakh crore (US$ 1.5376 trillion). As on May
20 2022, credit to non-food industries stood at Rs. 119.74 lakh crore (US$ 1.53 trillion)

Access to banking system has also improved over the years due to persistent effort from Government to promote
banking technology and promote expansion in unbanked and non-metropolitan regions. At the same time, India’s
banking sector has remained stable despite global upheavals, thereby retaining public confidence over the years.
Strong growth in savings amid rising disposable income levels are the major factors influencing deposit growth.
According to the RBI, bank deposits stood at Rs. 165.74 trillion (US$ 2.11 trillion) as of May 20, 2022.

Non-food credit growth of the banking system improved during fiscal 2022 reflecting the gradual recovery in
economic activities during the year. Non-food credit growth was 8.7% year-on-year at March 25, 2022 compared to
5.5% at March 26, 2021. As per data on sector-wise deployment of credit as of March 25, 2022 released by RBI, retail
loans grew by 12.4%, credit to industry by 7.1%, credit to the services sector by 8.9% and to the agriculture sector by
9.9%. Deposit growth was marginally higher compared to credit growth at the end of fiscal 2022, with growth in total
deposits of 8.9% at March 25, 2022. During the year, Indian banks reduced the interest rates on term deposits, given
the excess systemic liquidity. Lending rates of banks also continued to be moderate during the year. However, banks
began to increase deposit and lending rates during the first three months of fiscal 2023, following the monetary
policy tightening during May-June 2022. According to RBI’s Financial Stability Report of June 2022, non-performing
assets (NPA) of scheduled commercial banks declined during fiscal 2022, with gross NPA ratio at 5.9% and net NPA
ratio at 1.7% at March 31, 2022 compared to a gross NPA ratio of 7.5% and net NPA ratio of 2.4% at March 31, 2021.

Govt Initiatives in banking sector

Bank Board Bureau

With a view to improve the Governance of Public Sector Banks (PSBs), the Government had decided to set up an
autonomous Banks Board Bureau. The Bureau will recommend for selection of heads of Public Sector Banks and help
Banks in developing strategies and capital raising plans. The Banks Board Bureau has three ex-officio members and
three expert members in addition to Chairman. Except ex-officio members, all the Members and Chairman are part
time. The BBB has started functioning from 01.04.2016.

Capital for Public sector banks

Under the Indradhanush Plan, action related to (i) Appointment (ii) Bank Board Bureau (iii) Capitalization (iv) De-
stressing PSBs (v) Empowerment (vi) Framework of Accountability (vii) Governance Reforms has been initiated by the
Government. Further, the Government of India had proposed to make available Rs.70,000 crore out of budgetary
allocations for four years. The Government has infused a sum of Rs. 25,000 crores in 19 PSBs during financial year
2015-16, and in FY 2016-17, Rs. 22,915 crore was allocated to 13 PSBs. An amount of Rs. 10,000 crores has been
proposed for Re-capitalization of PSBs for the Financial Year 2017-18. Further, the Government has allowed all PSBs
to raise capital from public markets through Follow-on Public Offer (FPO) based on specific criteria.

The Payment and Settlement Systems (Amendment) Act, 2015

The Payment and Settlement Systems (Amendment) Act, 2015 was enacted by Parliament and received the assent of
President on 13.05.2015. The Amendment Act, inter-alia, sought to introduce reforms to increase transparency and
stability of Indian financial markets in line with globally accepted norms. The Payment and Settlement Systems Act,
2007 was enacted with a view to providing a sound legal basis for the regulation and supervision of payment systems
in India by Reserve Bank of India.

Card acceptance infrastructure

To augment card acceptance infrastructure for use of debit cards, a major drive was undertaken between December
2016 and March 2017, resulting in an increase in the number of card acceptance terminals at Point of Sale (PoS) by
an additional 12.54 lakh, up from 15.19 lakh as on 30.11.2016. Further, to improve such infrastructure in villages,
2.04 lakh PoS terminals have been sanctioned from the Financial Inclusion Fund by NABARD.

Debt Recovery Tribunals

The Recovery of Debts Due to Banks and Financial Institutions (RDDB & FI) Act, 1993 and Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), 2002 were amended by
the Enforcement of Security Interest and Recovery of Debts Laws & Miscellaneous Provisions (Amendment) Act,
2016 to rationalize the procedures and timelines followed by these Tribunals for expeditious adjudication and
speedier resolution of defaulted loans in time bound manner.

Moreover, In the Union Budget for fiscal 2023, several banking sector specific measures were announced including
financial support for the digital payment ecosystem and introduction of the Digital Rupee by RBI. The government
has proposed the setting up of 75 Digital Banking Units in 75 districts during the year. The Emergency Credit Line
Guarantee Scheme (ECLGS) was extended further up to March 2023, and its guarantee cover expanded from the
earlier 3.0 trillion to 5.0 trillion, with the additional amount earmarked exclusively for hospitality and related
enterprises.

Quarterly Results
INR Cr Q1FY23 Q1FY22 Q4FY22 %YOY change

Interest Earned 18,729 16,003 17,777 5.4

Interest Expended 9,345 8,243 8,957 4.3
Net interest income 9,384 7,760 8,820 6.4
Other Income 2,999 3,588 4,223 -29.0
Net revenue 12,383 11,348 13,043 -5.1
Operating expenses 6,496 4,932 6,576 -1.2
Employee Exp 2,186 1,852 1,887 15.9
Other Expenditure 4,310 3,081 4,690 -8.1
Operating Profit 5,887 6,416 6,466 -9.0
Provisions and Contingencies 359 3,532 987 -63.6
PBT 5,528 2,884 5,479 0.9
Taxes 1,402 724 1,361 3.0
PAT 4,125 2,160 4,118 0.2
No. of Equity Shares (In Crs) 307 307 307 0.1
Adj. EPS (INR) 13.4 7.0 13.4 0.1

INR Cr Q1FY23 Q1FY22 Q4FY22 %YOY change

Ratio
Cost-Income Ratio 52.5% 43.5% 50.4% 204 bps
Yield on IEA 6.94% 7.00% 6.68% 26 bps
Cost of funds 3.77% 3.87% 3.66% 11 bps
Spread 3.17% 3.13% 3.02% 15 bps
NIM (Reported) 3.60% 3.46% 3.49% 11 bps
ROA 1.4% 1.1% 1.5% -2 bps
ROE 14.1% 8.4% 14.6% -52 bps
Credit Cost (Calc.) 0.2% 2.3% 0.6% -35 bps

INR Cr Q1FY23 Q1FY22 Q4FY22 %YOY change

Balance Sheet
Advances 7,01,130 6,14,874 7,07,696 -0.9
Deposits 8,03,572 7,13,862 8,21,721 -2.2
 CD Ratio 87.3% 86.1% 86.1% 113bps
CASA 43.7% 43.1% 45.0% -129bps

INR Cr Q1FY23 Q1FY22 Q4FY22 %YOY change

Asset Quality
Amount of Gross NPA 21,037 25,951 21,822 -3.6
Amount of Net NPA 4,781 7,846 5,512 -13.3
% Gross NPAs 2.76 3.85 2.82 -6bps
% Net NPAs 0.64 1.20 0.73 -9bps
PCR (From Ace Equity) 77.0 69.8 75.0 200bps

Result Analysis
Axis Bank (Axis) reported broadly in-line operating performance. Lower-than-expected provisioning led to a sharp
beat on PAT. However, contrary to our expectations, advances and deposits declined sequentially. Asset quality
improved as slippages moderated QoQ.

The bank’s NII grew 21% YoY and 6% QoQ, driven mainly by NIM expansion. Reported NIM expanded 14bps YoY and
11bps QoQ to 3.6%. We believe this is a very positive outcome achieved through both the impact of asset repricing
and changes in business mix. ~69% of the bank’s advances have floating rates, of which 39% is repo-linked and 23% is
MCLR linked. In terms of business mix, de-growth in the low yielding corporate book contributed to NIM expansion.
Management expects NIM to reach 3.7–3.8% over the next 8–10 quarters.

The bank reported trading losses of INR667cr during the quarter. However, a strong 34% YoY increase in fee income
led to other income coming in at INR2,999cr, exactly in line with our estimate.

Net revenue grew by 9% YoY, but declined by 5% sequentially. Operating costs remained elevated as Cost to Assets
ratio increased to 2.24%. Consequently, PPoP declined by 8% YoY and 9% QoQ. Management has stated that their
Cost to Assets ratio will trend back down to 2% in the medium term.
Credit cost (calc.) came in at 0.2% vs our expectation of ~0.6%. This drove a sharp beat on PAT, which grew by 91%
YoY and was flat sequentially.

RoA improved 33bps YoY to 1.4%, whereas RoE increased 565bps YoY to 14.1%. Both ratios moderated slightly on a
QoQ basis. Although the bank’s balance sheet shrank during the quarter, we believe it performed well in terms of
NIM and asset quality.

Annual Financial Summary

Profit & Loss statement

(Rs mn, year ending Mar 31)

FY17 FY18 FY19 FY20 FY21 FY22

Net Interest Income 1,80,931 1,86,177 2,17,082 2,52,062 2,92,391 3,31,322

% Growth 7 3 17 16 16 13

Fee income 70,283 77,299 88,537 96,919 1,06,860 1,30,010

Add: Other income 46,630 32,372 42,767 58,446 41,522 22,195

Total Net Income 2,97,844 2,95,848 3,48,385 4,07,428 4,40,773 4,83,528

% Growth 14 (1) 18 17 8 10

Less: Operating Expenses (1,21,999) (1,39,903) (1,58,334) (1,73,046) (1,83,752) (2,36,108)

Pre-provision operating 1,75,845 1,55,945 1,90,051 2,34,381 2,57,022 2,47,420

profit
NPA Provisions (1,11,571) (1,65,987) (1,02,215) (1,27,530) (1,15,340) (51,840)

Other provisions (9,599) 11,258 (18,095) (57,800) (31,498) (21,755)

PBT 54,676 1,216 69,741 49,051 1,10,184 1,73,826

Less: taxes (17,883) 1,541 (22,975) (32,770) (22,173) (43,571)

PAT 36,793 2,757 46,766 16,281 88,011 1,30,255

% Growth (55) (93) 1,596 (65) 441 48

Balance Sheet
(Rs crores, year ending Mar 31)

Schedule No. As on As on
31-03-2022 31-03-2021
 Capital and Liabilities
Capital 1 613.95 612.75
Employees' Stock Options Outstanding 150.77 -
Reserves & Surplus 2 117,495.94 102,980.95
Minority Interest 2A 261.35 173.75
Deposits 3 820,914.16 698,302.63
Borrowings 4 199,778.16 152,248.72
Other Liabilities and Provisions 5 56,314.18 46,685.74
Total 1,195,528.51 1,001,004.54
Assets
Cash and Balances with Reserve Bank of India 6 94,034.51 51,808.57
Balances with Banks and Money at Call and Short Notice 7 18,309.00 11,615.79
Investments 8 274,608.13 225,335.77
Advances 9 725,125.50 625,749.90
Fixed Assets 10 4,679.12 4,329.69
Other Assets 11 78,483.01 81,875.58
Goodwill on Consolidation 289.24 289.24
Total 1,195,528.51 1,001,004.54

Cash Flow Statement

In INR Crores Year Year
ended ended
31-03- 31-03-
2022 2021
Cash flow from operating activities
Net profit before taxes 18,841.86 9,693.19
Adjustments for:
Depreciation on fixed assets 1,048.99 979.39
Depreciation on investments (264.48) 1,329.08
Amortisation of premium on Held to Maturity investments 823.78 592.12
Provision for Non-Performing Assets (including bad debts)/restructured assets 7,580.80 12,344.85
Provision on standard assets and others 2,224.17 3,322.61
Profit/(loss) on sale of land, buildings and other assets (net) 6.11 8.77
Employee Stock option Expense 150.77 -
30,412.00 28,270.01
Adjustments for:
(Increase)/Decrease in investments (24,189.72) (19,644.00)
(Increase)/Decrease in advances (106,571.94) (63,518.12)
Increase /(Decrease) in deposits 122,611.53 65,466.21
(Increase)/Decrease in other assets 2,920.04 4,801.71
Increase/(Decrease) in other liabilities & provisions 7,401.45 (715.93)
Direct taxes paid (4,446.06) (2,027.00)
Net cash flow from operating activities 28,137.30 12,632.88
Cash flow from investing activities
Purchase of fixed assets (1,408.97) (938.44)
 (Increase)/Decrease in Held to Maturity investments (25,830.38) (53,269.93)
Proceeds from sale of fixed assets 7.25 13.55
Net cash used in investing activities (27,232.10) (54,194.82)
Cash flow from financing activities
Proceeds from issue/(Repayment) of subordinated debt, Additional Tier I (2,377.45) -
instruments (net)
Increase/(Decrease) in borrowings (other than subordinated debt, Additional Tier I 49,906.90 (2,931.44)
instruments (net))
Proceeds from issue of share capital 1.20 48.41
Proceeds from share premium (net of share issue expenses) 275.83 10,102.17
Increase in minority interest 87.60 60.19
Net cash generated from financing activities 47,894.08 7,279.33
effect of exchange fluctuation translation reserve 87 (81)
Increincrease/decrease in cash and cash equivalents 19.5 (375.42

cash and cash equivalents at the beginning of the year 24.36 99.78
Cash cash and cash equivalents at the end of the year 343.51 24.36