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29 April 2020 Results Review 4QFY20
Axis Bank
HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
Taking it on the chin
AXSB’s 4Q operating performance was in-line with estimates, however high
COVID-19 related provisions resulted in an unexpected loss. The creation of
significant provision buffers in uncertain times is desirable. While the
systemic fallout of COVID-19 (slower growth and higher stress) will impact
AXSB, more than adequate CRAR, significant provision buffers, a fairly
granular liability base (benefiting from polarised deposit flows) and the
strategic re-orientation underpin our positive stance. Maintain BUY with a TP
of Rs 541 (1.5x FY22E ABV+ Rs 22 for subs).
Asset quality: GNPAs were stable at Rs 302bn (4.86%), as a result of lower
slippages (2.8% ann., -184bps QoQ). The fall in slippages was broad-based
(corp: -52.7%, retail: -3% and SME: -32%). Adj. for technical slippages, 84% of
corp slippages were from pre-identified stress. It is noteworthy that GNPAs
were 11bps lower due to the standstill classification of a/cs. AXSB, like its
peers will see higher slippages on a/c of COVID-19, particularly from SME
loans (~10% of the book vs. ~3% for ICICIBC, for e.g.) and the corp healing
cycle will be extended. We model slippages of ~3.2% over FY20-22E.
Deposit traction: Deposits registered a ~17/8% rise, with faster term deposit
growth at 23/8%, w/w retail TDs grew at 27/7%. CASA (41.2%) growth at
~8% QoQ was slower than expected, esp. in comparison with some peers.
AXSB should benefit from the increasing polarisation in the deposit
ecosystem - a positive in the current environment.
Provisions jump: Provisions increased 2.9/2.2x YoY/QoQ to Rs 77.3bn, much
higher than expected, with a 3.8/1.4x increase in LLPs to Rs 42bn (~3% of
loans). Std. asset prov. were Rs 13.38bn of which ~Rs 4.75bn pertained to the
RBI’s Jun-19 circular. A further ~Rs 7bn pertained to overdue a/cs as at 1st
Mar-20, of which mandated provisions were just Rs 730mn (RBI’s 17-Apr-20
circular). The remainder was largely towards COVID-19 related provisions.
Despite high existing provision levels (PCR at 69% and contingent
provisions at ~20% of GNPLs), we factor LLPs at ~2% over FY21-22E.
Management commentary on COVID-19: 10-12% of the borrowers (a/c for
25-28% of loans) opted for the moratorium as at 25-Apr-20. Most retail
borrowers were being offered moratoriums on an opt-out basis. As
permitted by the RBI, AXSB will offer moratorium only to NBFC-MFIs (on a
cases to case basis). AXSB made excess provisions as per its base case
scenario (expected impact to the order of a once in a 7 year event).
Financial summary
(Rs mn) 4Q
FY20
4Q
FY19 YoY (%)
3Q
FY20
QoQ
(%) FY19 FY20E FY21E FY22E
Net Interest
Income 68,077 57,056 19.3% 64,530 5.5% 217,082 252,062 262,437 298,418
PPOP 58,511 50,144 16.7% 57,427 1.9% 190,051 234,381 247,334 281,125
PAT (13,878) 15,051 NA 17,570 NA 46,766 16,272 92,777 122,827
EPS (Rs) (4.9) 5.9 NA 6.2 NA 18.2 5.8 32.9 43.5
ROAE (%)
7.2 2.1 10.4 12.4
ROAA (%)
0.63 0.19 0.98 1.20
Adj. BVPS (Rs)
215 268 292 341
P/ABV (x)
2.04 1.63 1.49 1.27
P/E (x) 24.2 75.7 13.3 10.0
Source: Bank, HSIE Research
BUY
CMP (as on 28 Apr 2020) Rs 456
Target Price Rs 541
NIFTY 9,381
KEY
CHANGES OLD NEW
Rating BUY BUY
Price Target Rs 541 Rs 541
EPS % FY21E FY22E
-5.3% -2.5%
KEY STOCK DATA
Bloomberg code AXSB IN
No. of Shares (mn) 2,821
MCap (Rs bn) / ($ mn) 1,285/16,914
6m avg traded value (Rs mn) 8,934
52 Week high / low Rs 828/285
STOCK PERFORMANCE (%)
3M 6M 12M
Absolute (%) (38.2) (35.9) (40.1)
Relative (%) (16.6) (17.7) (22.3)
SHAREHOLDING PATTERN (%)
Dec-19 Mar-20
Promoters 16.1 16.0
FIs & Local MFs 21.8 22.8
FPIs 47.2 45.6
Public & Others 14.9 15.6
Pledged Shares 0.0 0.0
Source : BSE
Darpin Shah
+91-22-6171-7328
Aakash Dattani
+91-22-6171-7337
Page | 2
Axis Bank: Results Review 4QFY20
Standard stress: (Expectedly) The pool of BB and below rated corporate loans
increased 27% QoQ to Rs 65.3bn (1.14% of loans). The downgrades into this pool
were substantially higher QoQ at Rs 19.6bn (cement, medical equipment and
auto related cos). After a sharp 66% QoQ increase in 3Q, the non-fund-based
exposure to similar entities grew just 6.4% QoQ to Rs 39.1bn. Imminent stress is
likely to result in a higher net influx into this pool which in turn serves as a
precursor to slippages.
Loans: Overall credit grew at a fairly decent pace of 15.5/3.9% YoY/QoQ,
reaching ~Rs 5.7tn. Retail loans continued to grow faster at 24.2/4.7%, and now
constitute 53.4% of loans. SME loans were flat QoQ and dipped 5.6% YoY. Corp
loans grew at 11.3/3.7%. Because of COVID-19, AXSB is likely to see a sharp
downtick in growth, led by the retail piece. We model loan growth of ~12% over
FY21-22E.
Max-life JV: The bank announced that it has entered into a JV with MAXF, to
increase its stake in Max Life Insurance to 30%. Regulatory approval is awaited
and will be key. We have not modeled the impact of this transaction in our
estimates.
SOTP
Rs bn Per Share Rationale
Axis Bank – Standalone 1,463 518 1.5x Mar-22E ABV of Rs 341
Axis Finance (NBFC) 37 13 1.5xFY22E BV
Axis AMC (Asset Management) 23 8 20x FY21E PAT
Axis Capital (IB and Institutional Equity) 13 5 15x FY22E PAT
Axis Securities (Retail Broking and Cross-Sell) 5 2 15x FY22E PAT
Total Value of Subsidiaries 78 28
Less : 20% Holding Discount 16 6
Total SOTP Value 1,526 541
Current Value 1,285 456
Upside (%) 18.7% 18.7%
Source: Bank, HSIE Research
Page | 3
Axis Bank: Results Review 4QFY20
Five quarters at a glance
Rs mn 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 YoY
Growth
QoQ
Growth
Income statement
Net interest income 57,056 58,437 61,018 64,530 68,077 19.3% 5.5%
Non-interest income 35,263 38,688 38,958 37,866 39,855 13.0% 5.3%
Treasury income 3,540 8,320 8,090 5,150 2,640 -25.4% -48.7%
Operating income 92,319 97,124 99,976 102,396 107,932 16.9% 5.4%
Operating Expenses 42,175 38,197 40,460 44,969 49,421 17.2% 9.9%
Operating Profits (PPOP) 50,144 58,928 59,516 57,427 58,511 16.7% 1.9%
Provisions 27,114 38,146 35,184 34,709 77,300 185.1% 122.7%
NPA Provisions 11,150 28,860 27,010 29,620 42,040 277.0% 41.9%
PBT 23,030 20,782 24,332 22,718 (18,789) -181.6% -182.7%
Tax expenses 7,979 7,081 25,453 5,148 (4,911) -161.6% -195.4%
PAT 15,051 13,701 (1,121) 17,570 (13,878) -192.2% -179.0%
Balance sheet items
Deposits (Rs bn) 5,485 5,407 5,840 5,917 6,401 16.7% 8.2%
CASA Deposits (%) 44.38 41.33 41.11 41.20 41.20 -318 bps 0 bps
Advances (Rs bn) 4,948 4,973 5,216 5,501 5,714 15.5% 3.9%
CD Ratio (%) 90.2 92.0 89.3 93.0 89.3 -94 bps -371 bps
CAR (%) 15.8 16.1 18.5 18.7 17.5 169 bps -119 bps
Tier I (%) 12.5 12.9 15.3 15.5 14.5 195 bps -105 bps
Profitability
Yield On Advances (%) 9.18 9.24 9.36 9.17 9.01 -17 bps -16 bps
Cost Of Funds (%) 5.69 5.70 5.62 5.42 5.20 -49 bps -22 bps
NIM (%) 3.44 3.40 3.51 3.57 3.55 11 bps -2 bps
Domestic NIM (%) 3.61 3.56 3.63 3.70 3.71 10 bps 1 bps
Cost-Income Ratio (%) 45.7 39.3 40.5 43.9 45.8 11 bps 187 bps
Tax Rate (%) 34.6 34.1 104.6 22.7 26.1 -851 bps 348 bps
Asset quality
Gross NPA (Rs bn) 297.9 294.0 290.7 300.1 302.3 1.5% 0.8%
Net NPA (Rs bn) 112.8 110.4 111.4 121.6 93.6 -17.0% -23.0%
Gross NPAs (%) 5.26 5.25 5.03 5.00 4.86 -40 bps -14 bps
Net NPAs (%) 2.06 2.04 1.99 2.09 1.56 -50 bps -53 bps
Delinquency Ratio (%) 2.48 3.87 3.91 4.64 2.8 31 bps -184 bps
Coverage Ratio (%) 62.1 62.5 61.7 59.5 69.0 689 bps 956 bps
Change In Estimates
Rs mn FY21E FY22E
Old New Change Old New Change
NII 270,528 262,437 -3.0% 306,560 298,418 -2.7%
PPOP 253,962 247,334 -2.6% 284,114 281,125 -1.1%
PAT 97,810 92,777 -5.1% 125,841 122,827 -2.4%
ABV (Rs) 281.9 292.4 3.7% 338.2 340.9 0.8%
Source: HSIE Research
QoQ NII growth was
driven by loan growth as
NIMs were flat
Non-interest income stood
out, growing despite
disruptions
~Rs 17bn of LLPs were
related to slippages in the
qtr
AXSB made significant
COVID-19 related
provisions in 4QFY20
Retail TD growth stood
out at ~27% YoY
CASA growth was
relatively lacklustre at
~8%
Segment-wise G/NNPAs
Corporate: 9.32/2.64%
SME: 5.77/2.86%
Retail 1.04/0.47%
Page | 4
Axis Bank: Results Review 4QFY20
Advances grew 15.5% YoY Share of retail loans continues to increase
Source: Company, HSIE Research
Source: Company, HSIE Research
Retail loan book mix: sub-segment share largely stable
(%) 2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
3Q
FY19
4Q
FY19
1Q
FY20
2Q
FY20
3Q
FY20
4Q
FY20
Housing 45 47 44 44 43 42 40 40 39 39 38 38 37 36 35
PL & CC 12 12 12 13 13 14 14 14 15 16 17 17 17 17 18
Auto 9 10 10 10 10 10 11 11 11 11 11 12 12 13 13
Non -Schematic 10 8 10 10 10 12 12 13 13 12 11 12 12 13 13
Retail Agri 15 14 16 15 15 14 15 14 13 14 14 13 13 12 12
LAP 9 9 8 8 9 8 8 8 9 8 9 8 9 9 9
Source : Bank, HSIE Research
Deposit mix: CASA ratio stable QoQ
(%) 2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
3Q
FY19
4Q
FY19
1Q
FY20
2Q
FY20
3Q
FY20
4Q
FY20
CA 16.3 15.7 21.0 18.2 19.2 17.2 21.1 15.3 16.7 16.4 16.3 13.2 13.6 13.2 14.1
SA 28.4 31.8 30.4 31.0 31.3 32.1 32.7 31.6 31.0 29.4 28.1 28.2 27.6 27.9 27.1
Retail TD 35.8 33.8 29.9 33.7 32.3 34.4 30.4 33.8 34.0 34.0 36.3 39.0 38.8 40.4 39.6
Others 19.5 18.6 18.7 17.1 17.3 16.3 15.9 19.3 18.3 20.2 19.4 19.7 20.1 18.4 19.2
Source : Bank, HSIE Research
Margins stable QoQ
% 2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
3Q
FY19
4Q
FY19
1Q
FY20
2Q
FY20
3Q
FY20
4Q
FY20
NIM 3.64 3.43 3.83 3.63 3.45 3.38 3.33 3.46 3.36 3.47 3.44 3.40 3.51 3.57 3.55
CoF 5.68 5.51 5.42 5.24 5.18 5.08 5.11 5.23 5.34 5.44 5.69 5.70 5.62 5.42 5.20
YoF 8.80 8.46 8.22 7.96 7.84 7.96 7.66 8.03 8.20 8.36 8.29 8.43 8.51 8.45 8.26
CD Ratio 92.9 93.6 90.0 97.9 98.5 102.9 96.9 98.7 95.1 92.4 90.2 92.0 89.3 93.0 89.3
Source: Bank, HSIE Research
9.0
11.0
13.0
15.0
17.0
19.0
21.0
23.0
1,200
2,200
3,200
4,200
5,200
6,200
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Advances (Rs bn) Growth (YoY, %)
Rs bn %
46 45 44 42 42 42 41 40 39 38 38 37 36 36 36 36
13 13 12 13 12 13 13 13 13 13 13 13 12 12 11 11
42 42 43 45 45 45 46 47 48 49 49 50 52 52 53 53
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Retail SME Corporate%
Page | 5
Axis Bank: Results Review 4QFY20
Non-interest income split
Rs bn 2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
3Q
FY19
4Q
FY19
1Q
FY20
2Q
FY20
3Q
FY20
4Q
FY20
Fee 19.4 18.0 24.2 20.0 21.7 22.5 24.5 21.2 23.8 26.2 30.2 26.6 26.5 27.7 29.3
% Loan (ann.) 2.22 2.06 2.69 2.11 2.18 2.16 2.28 1.92 2.12 2.25 2.49 2.15 2.08 2.07 2.09
Trading 5.4 15.3 4.3 8.2 3.8 2.0 2.2 1.0 1.4 3.8 3.5 8.3 8.1 5.2 2.6
Others 0.7 0.7 1.6 1.7 0.4 1.5 1.2 7.0 1.7 10.1 1.5 3.7 4.4 5.0 7.9
Total 25.4 34.0 30.1 30.0 25.9 25.9 27.9 29.2 26.8 40.0 35.3 38.7 39.0 37.9 39.9
Chg (%) 24.4 45.4 11.8 9.6 1.8 (23.7) (7.5) (2.5) 3.6 54.3 26.5 32.3 45.5 (5.4) 13.0
Source: Bank, HDFC sec Inst Research
Fee income split: retail dominates Fees as a % of loans
Source: Bank, HSIE Research Source: Bank, HSIE Research
C-I ratio increases QoQ Provisions jump
Source: Bank, HSIE Research
Source: Bank, HSIE Research
~81% of corporate slippages
were from the BB and below
book (vs. ~97% QoQ), which
dipped ~18% QoQ
The BB and below rated
corporate book is ~Rs 50bn (~1%
of advances) and it saw ~Rs
12bn of gross additions and ~Rs
9bn of net reductions
Rs 4.1bn of corporate slippages
were technical
The BB and below rated book
incl. a large non-funded telecom
exposure (Rs 13bn)
The downgrades to the BB and
below rated book incl. the
exposure to the beleaguered
broking co.
25 25 20 24 18 21 17 18 13 12 14 14 10 12 10 17
21 20 22 17 20 19 20 20
20 20 20 17 16 18 18 19
48 49 52 51 54 56 57 54 61 62 59 61 62 64 67 64
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Retail Banking Business banking
Agri and SME banking Treasury
Large and Mid Corp%
-
1.0
2.0
3.0
4.0
5.0
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Retail fee % Retail loan (ann., %)
Corp. fee % Corp. loan (ann., %)
35.0
37.0
39.0
41.0
43.0
45.0
47.0
49.0
51.0
53.0
55.0
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Opex/Other income (x) C-I ratio (%, RHS)
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Other provision (Rs bn, RHS) % Operating Profit
Page | 6
Axis Bank: Results Review 4QFY20
Provisions split: NPA and std. asset provisions rise
Rs bn 2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
3Q
FY19
4Q
FY19
1Q
FY20
2Q
FY20
3Q
FY20
4Q
FY20
NPA 36.5 35.8 18.3 20.9 33.4 27.5 81.3 30.7 26.9 33.5 11.2 28.9 27.0 29.6 42.0
% Loan (Ann.) 4.18 4.08 2.04 2.21 3.35 2.65 7.56 2.79 2.40 2.88 0.92 2.33 2.12 2.21 3.00
MTM (0.4) (0.0) 2.6 0.4 (1.4) (0.1) (1.1) 1.4 1.4 (3.2) 3.5 (0.6) 0.6 0.7 0.7
Others 0.1 2.2 4.9 2.1 (0.6) 0.7 (8.4) 1.3 1.1 0.2 12.5 9.9 7.5 4.4 34.5
Total 36.2 38.0 25.8 23.4 31.4 28.1 71.8 33.4 29.3 30.5 27.1 38.1 35.2 34.7 77.3
YoY % 412% 433% 121% 11% -13% -26% 178% 43% -7% 9% -62% 14% 20% 14% 185%
Source: Bank, HSIE Research
GNPA movement: slippages dip QoQ
Rs bn 2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
3Q
FY19
4Q
FY19
1Q
FY20
2Q
Y20
3Q
FY20
4Q
FY20
Opening 95.5 163.8 204.7 212.8 220.3 274.0 250.0 342.5 326.6 309.4 308.5 297.9 294.0 290.7 300.1
Slippages 87.7 45.6 48.1 35.2 89.4 44.3 165.4 43.4 27.8 37.5 30.1 48.0 49.8 62.1 39.2
% ann. 10.05 5.21 5.34 3.71 8.98 4.26 15.37 3.94 2.48 3.22 2.48 3.87 3.91 4.64 2.80
Upgrade/ Recovery 10.7 3.5 28.0 3.1 10.5 40.1 34.0 29.2 21.9 16.2 23.8 21.8 22.1 24.2 24.9
Write-off 8.7 1.2 11.9 24.6 25.2 28.2 38.9 30.1 23.2 22.1 17.0 30.1 31.0 27.9 12.7
Closing 163.8 204.7 212.8 220.3 274.0 250.0 342.5 326.6 309.4 308.6 297.9 294.1 290.7 300.7 301.7
Source: Bank, HSIE Research
Asset quality: GNPAs stable QoQ Provisions drag RoAAs
Source: Bank, HSIE Research
Source: Bank, HSIE Research
Peer Set Comparison
MCap
(Rs
bn)
CMP
(Rs) Rating
TP
(Rs)
ABV (Rs) P/E (x) P/ABV (x) ROAE (%) ROAA (%)
FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E
AUBANK 155 512 REDUCE 510 121 131 163 24.2 24.4 20.5 4.10 3.80 3.05 16.7 13.4 14.0 1.70 1.41 1.42
AXSB# 1,285 456 BUY 541 268 292 341 75.7 13.3 10.0 1.63 1.49 1.27 2.1 10.4 12.4 0.19 0.98 1.20
CUBK 92 125 BUY 176 66 72 83 12.0 12.2 11.3 1.88 1.73 1.50 14.6 12.7 12.1 1.61 1.47 1.43
DCBB 25 81 ADD 114 94 101 116 7.0 6.7 6.2 0.86 0.80 0.70 11.0 10.4 10.2 0.96 0.92 0.90
FB 93 47 BUY 71 65 67 77 5.8 5.6 5.4 0.72 0.70 0.61 11.5 10.8 10.2 0.95 0.89 0.84
ICICIBC# 2,319 360 BUY 435 155 168 190 18.3 10.6 8.6 1.60 1.44 1.23 7.1 11.6 12.5 0.86 1.32 1.44
IIB 333 469 ADD 575 459 512 575 7.4 11.3 8.0 1.02 0.92 0.82 14.7 8.1 10.2 1.51 0.93 1.21
KMB# 2,531 1,326 ADD 1,263 237 255 295 32.0 31.5 28.1 4.30 4.00 3.33 13.4 12.2 11.7 1.84 1.70 1.69
KVB 23 29 REDUCE 33 56 53 62 9.7 5.8 5.0 0.52 0.54 0.47 3.7 6.0 6.9 0.33 0.53 0.59
RBK 64 126 REDUCE 141 189 198 218 12.0 11.3 7.8 0.67 0.64 0.58 5.9 5.2 7.1 0.60 0.57 0.76
SBIN# 1,645 184 BUY 316 179 183 227 4.1 3.3 2.6 0.41 0.40 0.32 7.0 8.2 9.6 0.43 0.50 0.60
Source: Company, HSIE Research, # Adjusted for subsidiaries value
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
GNPA (Rs bn) NNPA (Rs bn)
GNPA (%, RHS) NNPA (%, RHS)
(1.80)
(0.80)
0.20
1.20
2.20
(4.0)
(2.0)
-
2.0
4.0
6.0
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
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3Q
FY
19
4Q
FY
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1Q
FY
20
2Q
FY
20
3Q
FY
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4Q
FY
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NII Other income Opex
Other provision Tax provision RoAA (RHS)
Page | 7
Axis Bank: Results Review 4QFY20
Financials Income Statement
(Rs mn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Interest earned 354,786 409,880 445,422 457,803 549,858 626,352 679,654 755,686
Interest expended 212,545 241,551 264,490 271,626 332,776 374,290 417,217 457,268
Net interest income 142,241 168,330 180,931 186,177 217,082 252,062 262,437 298,418
Other income 83,650 93,715 116,913 109,671 131,303 155,366 170,774 183,363
Fee income (CEB) 61,211 67,076 70,283 77,299 88,537 97,553 107,585 122,862
Treasury income 9,949 10,186 31,738 13,252 7,581 24,200 27,500 22,500
Total income 225,892 262,044 297,844 295,848 348,385 407,428 433,210 481,781
Operating expenses 92,037 101,008 121,999 139,903 158,334 173,046 185,876 200,656
Employee expenses 31,150 33,760 38,919 43,130 47,473 53,210 55,281 58,183
PPOP 133,854 161,036 175,845 155,945 190,051 234,381 247,334 281,125
Provisions and contingencies 23,286 37,099 121,170 154,729 120,310 185,339 123,368 117,006
Provisions for std. and non-performing advances 22,125 41,891 115,055 164,544 110,313 142,740 124,618 118,256
Profit before tax 110,568 123,938 54,676 1,216 69,741 49,042 123,967 164,119
Tax expense 36,990 41,701 17,883 -1,541 22,975 32,770 31,190 41,292
Profit After Tax 73,578 82,237 36,793 2,757 46,766 16,272 92,777 122,827
Source: Bank, HSIE Research
Statement of assets and liabilities
(Rs mn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Source of funds
Share capital 4,741 4,775 4,790 5,133 5,143 5,643 5,643 5,643
Reserves and surplus 442,024 526,883 552,835 629,320 661,620 843,835 931,973 1,045,588
Shareholders’ funds 446,765 531,658 557,625 634,453 666,763 849,479 937,616 1,051,231
Savings deposits 882,921 1,057,931 1,260,483 1,482,020 1,541,288 1,735,920 1,874,794 2,062,273
Current deposits 561,082 636,519 870,017 956,496 892,653 901,140 919,163 951,333
Term deposits 1,780,416 1,885,225 2,013,288 2,097,711 3,050,772 3,763,989 4,237,735 4,842,016
Total deposits 3,224,419 3,579,676 4,143,788 4,536,227 5,484,713 6,401,049 7,031,692 7,855,623
Borrowings 797,583 992,264 1,050,309 1,480,161 1,527,758 1,479,541 1,351,384 1,237,023
Other liabilities 150,557 151,079 262,955 262,455 330,731 421,579 485,199 558,641
Total equity and liabilities 4,619,324 5,254,676 6,014,677 6,913,296 8,009,965 9,151,648 9,805,891 10,702,518
Application of funds
Cash and bank balances 360,990 333,254 502,562 434,549 672,046 972,683 717,002 483,390
Investments 1,175,502 1,220,062 1,287,934 1,538,761 1,749,693 1,567,343 1,775,048 1,933,070
Government securities 812,460 850,430 905,981 1,013,546 1,168,229 1,259,820 1,441,497 1,571,125
Advances 2,810,830 3,387,737 3,730,693 4,396,503 4,947,980 5,714,242 6,328,523 7,227,173
Fixed assets 25,143 35,232 37,469 39,717 40,366 43,129 45,285 47,550
Other assets 246,858 278,391 456,019 503,766 599,880 854,252 940,033 1,011,336
Total assets 4,619,324 5,254,676 6,014,677 6,913,296 8,009,965 9,151,648 9,805,891 10,702,518
Source: Bank, HSIE Research
Page | 8
Axis Bank: Results Review 4QFY20
Key Ratios
FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Valuation ratios
EPS (Rs) 31.0 34.4 15.4 1.1 18.2 5.8 32.9 43.5
Earnings growth (%) 18.3 11.8 (55.3) (92.5) 1,596.4 (65.2) 470.2 32.4
Core BVPS (Rs) 188.5 222.7 232.8 247.2 259.3 301.1 332.3 372.6
Core ABVPS (Rs) 182.9 212.1 196.8 182.6 215.4 267.9 292.4 340.9
DPS (Rs) 4.6 5.0 5.0 0.0 1.0 0.0 1.6 3.3
RoAA (%) 1.7 1.7 0.7 0.04 0.63 0.19 0.98 1.20
RoAE(%) 17.8 16.8 6.8 0.5 7.2 2.1 10.4 12.4
P/E (x) 14.7 13.2 28.7 409.3 24.2 75.7 13.3 10.0
P/ABV (x) 2.5 2.1 2.2 2.4 2.0 1.6 1.5 1.3
P/PPOP (x) 1.6 1.4 1.2 1.4 1.2 1.1 1.0 0.9
Dividend yield (%) 1.0 1.1 1.1 - 0.2 - 0.4 0.7
Profitability (%)
Yield on advances 10.1 9.69 9.31 8.40 8.84 9.06 8.92 8.83
Yield on investments 7.3 7.83 7.67 7.06 6.90 6.78 7.05 7.00
Cost of funds 5.8 5.62 5.42 4.85 5.11 5.03 5.13 5.23
Cost of deposits 5.7 5.45 5.09 4.42 4.73 4.69 4.72 4.77
Core spread 4.3 4.07 3.89 3.55 3.74 4.03 3.79 3.60
NIM 3.7 3.80 3.64 3.32 3.33 3.50 3.36 3.40
Operating efficiency
Cost/average assets 2.2 2.0 2.2 2.2 2.1 2.0 2.0 2.0
Cost/income 42.6 40.1 45.8 49.5 46.5 45.2 45.8 43.7
Balance sheet structure (%)
Loan growth 22.2 20.5 10.1 17.8 12.5 15.5 10.8 14.2
Deposit growth 14.8 11.0 15.8 9.5 20.9 16.7 9.9 11.7
CD ratio 87.2 94.6 90.0 96.9 90.2 89.3 90.0 92.0
Equity/ assets 9.7 10.1 9.3 9.2 8.3 9.3 9.6 9.8
Equity/ advances 15.9 15.7 14.9 14.4 13.5 14.9 14.8 14.5
CASA 44.8 47.3 51.4 53.8 44.4 41.2 39.7 38.4
Capital adequacy (CAR) 15.1 15.3 15.0 16.6 15.8 16.9 17.1 17.3
w/w Tier 1 12.1 12.5 11.9 13.0 12.5 13.9 14.3 14.6
Asset quality
Gross NPLs (Rs mn) 41,102 60,918 212,862 342,544 297,954 302,404 343,779 292,914
Net NPLs (Rs mn) 13,167 25,222 86,266 165,917 112,756 93,604 112,429 89,441
Gross NPL (%) 1.34 1.67 5.04 6.77 5.26 4.86 5.43 4.05
Net NPL (%) 0.44 0.70 2.11 3.40 2.06 1.56 1.78 1.24
Slippage ratio (%) 1.1% 2.3% 6.1% 8.2% 3.0% 3.7% 3.6% 2.8%
Calc. PCR (%) 68.0 58.6 59.5 51.6 62.2 69.0 67.3 69.5
Provisions/ average loans (%) 0.70 1.23 3.13 4.08 2.19 2.39 2.04 1.70
RoAA Tree
Net interest income 3.37% 3.41% 3.21% 2.88% 2.91% 2.94% 2.77% 2.91%
Non-interest income 1.98% 1.90% 2.07% 1.70% 1.76% 1.81% 1.80% 1.79%
Treasury income 0.24% 0.21% 0.56% 0.21% 0.10% 0.28% 0.29% 0.22%
Operating cost 2.18% 2.05% 2.17% 2.16% 2.12% 2.02% 1.96% 1.96%
Non-tax provisions 0.55% 0.75% 2.15% 2.39% 1.61% 2.16% 1.30% 1.14%
Provisions for std. & non-performing assets 0.42% 0.77% 1.98% 2.57% 1.37% 1.49% 1.30% 1.13%
Tax expense 0.88% 0.84% 0.32% -0.02% 0.31% 0.38% 0.33% 0.40%
RoAA 1.74% 1.67% 0.65% 0.04% 0.63% 0.19% 0.98% 1.20%
Leverage (x) 10.2 10.1 10.3 10.8 11.5 11.3 10.6 10.3
RoAE 17.75% 16.81% 6.76% 0.46% 7.19% 2.15% 10.38% 12.35%
Source: Bank, HSIE Research
Page | 9
Axis Bank: Results Review 4QFY20
Rating Criteria
BUY: >+15% return potential
ADD: +5% to +15% return potential
REDUCE: -10% to +5% return potential
SELL: > 10% Downside return potential
Date CMP Reco Target
9-Apr-19 754 BUY 894
26-Apr-19 741 BUY 896
24-Jun-19 771 BUY 895
9-Jul-19 783 BUY 896
31-Jul-19 707 BUY 900
22-Sep-19 680 BUY 907
1-Oct-19 685 BUY 986
9-Oct-19 686 BUY 986
23-Oct-19 713 BUY 958
30-Dec-19 760 BUY 958
9-Jan-20 725 BUY 992
23-Jan-20 713 BUY 988
2-Mar-20 697 BUY 911
15-Apr-20 417 BUY 541
20-Apr-20 456 BUY 541
29-Apr-20 456 BUY 541
From 2nd March 2020, we have moved to new rating system
RECOMMENDATION HISTORY
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Axis Bank: Results Review 4QFY20
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