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Cautious, Conservative and Consistent Growth
Motilal Oswal Global Investor Conference
20th August 2019
Macro Environment showing signs of weakness
2
3
Global economy is slowing, reflected in India too with growth weakening
0.1%1.0% 0.8% 0.4%
2.7%
1.9%
1.4%1.4%
5.3% 5.0%
4.8%4.8%
8.0% 7.9%
6.9%6.6%
-1%
1%
3%
5%
7%
9%
FY16 FY17 FY18 FY19
Agriculture Industry Services
India GVA growth
Source: *IMF Estimates, MOSPI, Axis Bank Research
Global growth has slowed down recently
3.58%
3.44%
3.37%
3.77%
3.58%
3.22%
CY14 CY15 CY16 CY17 CY18 CY19E*
High frequency indicators point towards slowdown in industry and
services sectors
4
Source: Various government and private bodies
-15%
-5%
5%
15%
25%
35%
45%
55%
Q1 FY18 Q3 FY18 Q1 FY19 Q3 FY19 Q1 FY20
% Y
oY
CV Sales
-10%
-5%
0%
5%
10%
15%
20%
25%
Q1 FY18 Q3 FY18 Q1 FY19 Q3 FY19 Q1 FY20
% Y
oY Traffic movement
Cargo traffic: All airports Passenger traffic: All airports
2%
4%
6%
8%
Q1 FY18 Q3 FY18 Q1 FY19 Q3 FY19 Q1 FY20
% Y
oY
Rail freight
-5%
0%
5%
10%
15%
20%
Q1 FY18 Q3 FY18 Q1 FY19 Q3 FY19 Q1 FY20
% Y
oY Cement Production
Liquidity has improved and rates have begun to come down, but offtake is
still sluggish
5Source: RBI, Axis Bank Research
3%
6%
9%
12%
15%
18%
Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19
Non-food credit growth (%, YoY)
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
7.0
8.0
9.0
10.0
11.0
Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19
%%
Bank lending rates
WALR(Fresh Rupee Loans)
MCLR
Repo Rate [R]
Some other factors affecting corporates
Source: RBI, IBBI, Axis Capital, Axis Bank Research
Promoter leverage remains high Resolutions taking some time
...Out of the 94 CIRPs that ended with resolution
plan, 65 cases got approved after 270 days
Though recovery rates are almost twice as high...
23%
43%
0%
10%
20%
30%
40%
50%
DRT, SARFAESI, LokAdalats, etc.,: 2007-17
Realisation by FCs underIBC: 2017-19
Average recovery under various recovery regimes
5
24
65
0
20
40
60
80
<= 180 180 - 270 > 270
Num
ber
of
cases
Number of days taken to approve resolution plan6
9
12
15
18
21
5
10
15
20
25
Jun
-10
Jun
-11
Jun
-12
Jun
-13
Jun
-14
Jun
-15
Jun
-16
Jun
-17
Jun
-18
Jun
-19
(%)
($ bn)
Promoter shares pledged
Pledged value of promoter equity [RHS]
NBFCs with ALM/asset quality concerns
have faced funding issues
6
Category wise 3-month CP spreads over 91-day T-bill
The Axis Bank Story – Recent Performance
7
8
Over the last 10 years, Axis Bank has built an enviable franchise
Balance Sheet CASA Deposits Advances Branches
Credit Cards Operating Profit Subsidiaries Brand
827
4,094
FY09 Q1FY20
81,557
4,97,276
FY09 Q1FY20
52% retail
20% retail
50,644
2,23,474
FY09 Q1FY20
4x
3,725
19,005
FY09 FY19
2.1%
10.5%
FY11 2MFY20
Market Share on
spends
1,47,722
7,74,566
FY09 Q1FY20
` crore
5x 6x 5x
5x 5x
` crore ` crore
` crore
36% 38%43% 45%
50%55%
61% 62%
FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
33%38% 40% 41%
45% 47%50% 52%
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Jun-19
68%
75%78%
81% 81%84%
81% 80%
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Jun-19
9
The Bank has become increasingly Retail over these years
Share of Retail in Deposits Share of Retail in Advances Share of Retail in Fee Income
* Includes CASA and Retail TD
Retail Deposits* CAGR^ 16% Retail Advances CAGR^ 25% Retail Fees CAGR** 21%
All numbers in ₹ bn
^ CAGR over Mar’13 to June’19
** CAGR over FY13 to FY19
65,497
88,028
1,11,932
1,38,521
1,67,993
2,06,464
2,45,8122,58,205
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Jun-19
25% CAGR*
54% 50% 48% 45% 44%40% 38% 38%
18%
15%16%
17% 16%
15%14% 13%
11%
10%8% 9% 10%
11%11% 12%
6%
6%7% 8% 8%
10% 12% 12%
6%
7%7% 8% 8%
8% 9% 8%
2%
2%2% 3% 4%
4% 5% 5%
1% 2% 3% 3% 4%
3%10% 12% 9% 8% 9% 8% 8%
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Jun-19
…with significant dispersion in mix over time
Home loans Rural lending Auto loans PL LAP CC SBB Others
33%
38%
40% 41%
45%47%
50%52%
Share of Retail Advances
Retail Loans have grown and diversified significantly
* 6yr CAGR (Mar’13 to Jun19)
Retail Advances have shown strong growth…
3 core components of the Bank’s strategy in Retail Lending
Cross sell to existing deposit customers
Distribution through branches
Strong analytics engine driving underwriting
PL – Personal Loan, SBB – Small Business Banking,
LAP – Loan against Property, CC – Credit Cards
All figures in ` Crores
10
5.6%7.2%
8.2%9.8%
11.2%12.0% 12.7% 12.6%
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 May-19
3.9%
5.8%7.1%
8.0% 8.7%9.6% 10.2% 10.5%
FY13 FY14 FY15 FY16 FY17 FY18 FY19 2MFY20
Credit Cards in Force – Market Share*
Credit Cards Spends – Market Share
Source: RBI Data Reports | *Market share as of the year ending period
Our Credit Cards business has grown strongly in the last 6 years
and is now the 4th largest in the country
Premium Cards
Co-branded Cards
Featured Cards
Market share has more than
doubled over the last 6 years
11
73,3
74
75,2
92
79,3
91
81,5
18
83,3
29
87,1
67
93,2
55
96,4
20
1,0
9,2
25
1,1
2,7
25
1,1
3,8
78
1,1
6,9
25
1,2
1,3
22
1,2
6,2
70
1,3
4,6
27
1,3
7,2
81
1,4
0,0
81
1,4
2,9
67
1,4
7,4
54
34,6
98
37,1
60
37,6
79
37,8
12
40,8
42
44,2
44
43,7
90
45,5
70
52,9
41
52,9
33
56,6
17
59,0
20
64,3
66
60,5
81
61,3
48
61,3
34
66,6
64
66,7
09
68,7
77
1,0
0,0
98
1,0
5,7
41
1,1
0,0
67
1,1
2,5
74
1,1
8,2
89
1,2
3,3
26
1,2
8,4
38
1,3
3,6
02
1,3
0,7
73
1,2
4,3
00
1,2
9,5
77
1,3
4,8
05
1,3
8,0
74
1,4
1,5
08
1,4
5,3
03
1,5
8,7
89
1,7
0,4
60
1,8
6,8
35
2,0
7,3
61
Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
SA (QAB) CA (QAB) RTD* (QAB)
24%
19% 18%
15% 16% 17% 17%19%
21%
14% 13% 13%11%
13% 14%15%
17%
21%
24%
(CASA+RTD*) QAB…
Granular deposits have seen strong growth during the last four years
All figures in ` Crores
* Retail Term Deposits
Medium term average = 17%
12
2.68%
2.80%2.84%
2.96%
2.96%
4.00%
FY14 FY15 FY16 FY17 FY18 FY19
Axis Bank Market share inTerm Deposits
Source: RBI, Axis Bank
19%
17%
8%
4%
Private Banks
Axis Bank
All Banks
PSBs
FY14-19 CAGR growth in Advances
13
The Bank has historically grown at much higher pace than industry
Source: RBI, Axis Bank
19% 20%21%
25%27%
30%33%
0%
10%
20%
30%
40%
50%
60%
70%
80%
FY13 FY14 FY15 FY16 FY17 FY18 FY19
Share of Private Banks in Advances has been consistently rising in recent years
Private Banks PSBs Foreign Banks
FY19 Market
Share of 5%
14
However, the last 2-3 years have been extremely challenging for the Bank
1,179 1,2961,789
3,800
11,157
16,599
10,221
2,886
FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
Provision for non-performing assets*
2,023 2,548 2,854
7,345
21,782
33,419
13,871
4,798
FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
Gross Slippages
*including bad debts written off and write backs
All figures in ` Crores
1.06% 1.22% 1.34%1.67%
5.04%
6.77%
5.26% 5.25%
0.32% 0.40% 0.44%0.70%
2.11%
3.40%
2.06% 2.04%
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Jun-19
GNPA% NNPA%
15
During FY19, the Bank crossed the inflection point on this tough journey
5,179
6,218
7,358
8,224
3,679
276
4,677
1,370
FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
All figures in ` Crores
Gross and Net NPA ratios have moderated Profit after tax improved further
16
The asset quality challenges of recent years have moderated
27,411
19,685
8,9947,467 7,504
7.3%
4.7%
1.8%
1.3% 1.3%
-4.0%
-2.0%
0.0 %
2.0 %
4.0 %
6.0 %
8.0 %
0
500 0
100 00
150 00
200 00
250 00
300 00
Jun-16 Mar-17 Mar-18 Mar-19 Jun-19
As a % of Gross Customer Assets
BB & Below pool size has been shrinking
0.61% 0.62% 0.61%
1.11%
2.82%
3.57%
1.91%
2.45%
2.06%
FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q1FY19Q1FY20
*
*
79%78% 78%
72%
65%65%
77%
78%
FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
Credit cost has moderated Provision Coverage ratio is now at 78%
• Bank continues to remain cautious and conservative when it comes to downgrades, recognition and provisioning
• As on 30thJune 2019, the Bank has additional provisions of `2,358 crores towards various risk contingencies, over and above the regular NPA
provisioning and the 0.4% standard assets provisioning requirement
* Q1FY19 and Q1FY20 credit costs are annualised
68%
74%
81%79% 79%
85% 86%
95% 95%
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
Percentage of sanctions rated A- & above
New originations in Corporate Credit are of better quality and
more granular
287%
209%
155% 154%162%
142%
124% 121%112%
99%
Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Jun-19
Exposure to Top 20 single borrowers as a % of Tier I
Capital
Fresh originations are predominantly
from entities rated A- or better
Concentration Risk has reduced
significantly from peak
17
0.40x 0.40x
0.67x
0.76x0.78x
0.93x
Loan against Property Credit Card Home Loan Personal Loan Auto Loan Commercial Vehicle
18
The portfolio choices and conservative underwriting policies in Retail have
resulted in better risk outcomes than peer average
Delinquency benchmarking (as of Mar’19)
Peer Private Bank average = x
Axis Bank
2.21% 2.22%
2.08%
2.15%2.17%
2.13%
2.08%
FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
Opex to Average Assets
We have also started focusing rigorously on the cost
efficiency of our businessAll figures in ` Crores
19
14%
16%
10%
21%
15%
13%
3%
19%
17%16%
14%
-1%
18%
20%
FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
Operating Expense growth Operating Revenue growth
Positive
Jaws
Opex to assets ratio moderated even further… … resulting in widening of positive jaws
* Q1FY20 figures are annualised
*
18.23 18.5717.49
7.22
0.53
8.099.19
FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
Return on Equity (in %)
All this has resulted in a slow but noticeable improvement in
shareholder return metrics
1.78 1.831.72
0.65
0.04
0.630.69
FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
Return on Assets (in %)
26.45
30.85
34.93
15.34
1.12
18.09
21.14
FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
Diluted EPS (`)
163
188
223233
247259
272
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Jun-19
Book Value Per Share (`)
20* Q1FY20 figures are annualised
*
*
*
The Axis Bank Story – Strategy for FY20-22
21
22
Three vectors of our strategy for the next three years
rowth rofitability ustainability
• Grow deposits in line with loans
• Step up growth in Wholesale
Bank
• Continue momentum in Retail
Bank
• Establish leadership in digital and
payments
• Scale-up subsidiaries materially
• Optimize business mix
• Improve operating efficiency
• Sweat existing infrastructure
• Reduce credit cost below long
term average
• Strengthen the Core -
technology, operations, credit risk
and process excellence
• Focus on disciplined execution
• Embed conservatism in the
Bank’s internal policies and
practices
Our goal is to deliver 18% ROE sustainably
23
The Bank continues to increase conservatism in all its business choices
Consolidation of all
Underwriting operations
under one separate vertical
headed by CCO
Strengthen Operational
Compliance and Risk
Management architecture
Systematically increase
provisioning across identified
weak standard and non fund
based assets
Growth rates to be an
outcome of deliberate and
conservative choices
Credit Underwriting
Risk Management
Business Growth
Balance Sheet strengthening
24
Wholesale Credit Underwriting environment at Axis Bank has been decisively reset
Enhanced Credit Underwriting framework – Exposure levels commensurate with ratings
Strengthening of Early Warning System (EWS) framework
Adopting conservative approach towards downgrading into BB & Below book
Formula based approach towards building up contingency provisions
Accountability framework in place for the Business teams to have better role clarity
19.7%
9.2%
18%
Avg FY11-15 Q1FY20 Medium termAspiration
ROE
25
The ROE path back to 18% would be driven by three elements
3 drivers of the return to 18% ROE
Risk normalization
Business mix optimization
Improvement in Operating efficiency
Reduce credit cost below long term average
Reduce Cost to Assets to 2%
Portfolio choices based on RaRoC
1
2
3
*
* Q1FY20 figures are annualised
26
MD & CEO
ED Wholesale Banking
ED Retail
Banking
ED Corporate
CenterCRO CCO CFO Head IT
Head Digital
Banking
We now have the entire team in place to turn our aspiration into reality in the medium term
MD & CEO – Managing Director and Chief Executive Officer; ED – Executive Director; CRO – Chief Risk Officer;
CCO – Chief Credit Officer; CFO – Chief Financial Officer
Other key positions include
Ravi Narayan joined the Bank as Head of Branch Banking in Feb 2019.
Ganesh Sankaran joined the Bank in March 2019 and heads the Wholesale Banking Coverage Group.
Narendra Kumar Dixit joined the Bank in July 2019 as Head of Liability Sales
Ratan Kesh joined the Bank in April 2019 as Head - Process Transformation & Service Excellence
Amit Talgeri joined the Bank as Head Retail Risk in April 2019
Neeraj Gambhir joined the Axis family as Head of Treasury & Markets in June 2019.
Deepak Maheshwari
(joined in Jan 2019)
Sameer Shetty(joined in July 2019)
Pralay Mondal*(joined in April 2019)
* appointed as the ED (Retail Banking) of the Bank with effect from 1st Aug’ 2019
We have re-organized the Wholesale Bank, creating an
integrated franchise
Re-Oriented Coverage Groups
Large Corporate Mid Corporate Commercial BankingFocused Segmental
Coverage
CreditLiabilities and
Transaction BankingTreasury
Bank and Subsidiary Products
Strengthened Operations and Service Infrastructure
27
Note: Classification based on client annual revenue – Commercial ( `10 cr- `250 cr); Mid (` 250 cr- ` 1000 cr); Large ( > ` 1000 cr)
• Has been the leader in Equity and Equity
linked deals over the last decade
• Offers investors and companies with the
spectrum of financial needs in the areas of
Equity Capital Markets, M&A, Private Equity,
Structured Finance and Institutional Equities.
• Axis Securities is one of the fastest growing
stock brokerage firms in India,
• Currently ranked 3rd among brokerages in
India in terms of total client base.
• Axis Bank 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
• Our digital invoice discounting platform
‘Invoicemart’ continues to be India’s leading
TReDS platform with market share of nearly 41%
• One of the fastest growing NBFCs with loan
book of `7,962 crores (as of June’19)
• Offers complementary product offerings to
Bank customers that include Structured
Financing, Special Situations Funding, etc
27
We are also tightly integrating the key subsidiaries of the Bank and investing in scaling them as key value drivers
• Axis Mutual Fund is among the fastest growing
AMC since launch in ‘09
• Has market share of 4.01% as at end of
June’19
• Acquired in Sep’17, it is among the top non-
bank financial services platform in the industry
with a significant customer franchise footprint
• Freecharge is being positioned by the Bank
as an engine that generates a large base of
new to bank customers that are young and
digitally native
29
In Summary
Axis Bank has built an enviable franchise over the last 10 years
Amidst tough macro environment, the Bank remains positioned for cautious,
conservative and consistent growth
We remain committed to our 3 year Execution Strategy, with an aspiration of
delivering 18% ROE sustainably
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
The Bank continues to increase conservatism in all its business choices
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.
30
Safe Harbor
Thank you
32