Cautious, Conservative and Consistent Growth...Some other factors affecting corporates Source: RBI, IBBI, Axis Capital, Axis Bank Research ... Government’s measures to boost growth

Cautious, Conservative and Consistent Growth

CLSA Investors’ Forum

9th September 2019

Macro Environment showing signs of weakness

2

0.1%1.0% 0.8% 0.4% 0.3%

2.7%1.9%

1.4%1.4%

0.4%

5.3% 5.0%

4.8%4.8%

4.3%

8.0% 7.9%

6.9%6.6%

4.9%

FY16 FY17 FY18 FY19 Q1FY20

Agriculture Industry Services

3

Global economy is slowing, reflected in India too with growth weakening

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%


% Y

oY Traffic movement

Cargo traffic: All airports Passenger traffic: All airports

2%

4%

6%

8%


% Y

oY

Rail freight

-5%

0%

5%

10%

15%

20%


% Y

oY Cement Production

Liquidity has improved and rates have begun to come down, but offtake is

still sluggish

5Source: RBI, Axis Bank Research

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

Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19

%% Bank Lending Rates

WALR(Fresh Rupee Loans)

MCLR

Repo Rate [R]

0%

3%

6%

9%

12%

15%

18%

Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19

Non-food credit growth (%, YoY)

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

7

Government’s measures to boost growth

Banks/NBFCs

• Upfront release of `70,000 Crore Capital for PSBs

• Additional liquidity support of `20,000 Crore to HFCs by NHB

• Co-origination of loans by PSBs jointly with NBFCs

• Repayment of future GST refunds to MSMEs within 60 days

• Amendment to MSME Act being considered

• Decisions on U.K. Sinha Committee recommendations# within 30 days

Source: Presentation made by Union Finance & Corporate Affairs Minister in Aug’19

• Delayed payments from Government/ CPSEs to be monitored

• `100 lakh crores allocated for developing infrastructure over 5 years

• Decision to pay 75% of the arbitration awards

• Revision of one time registration fees deffered till June 2020

• Higher depreciation at 30% for all vehicles acquired till March 2020

• Lifting of ban on purchase of new vehicles by Government Depts.

Ministry of Finance has shown intent to further continue engaging with stakeholders for timely and suitable interventions for

different sectors

Infrastructure

MSMEs

Automotive

# include recommendations such as on ease of credit, marketing, technology, delayed payments

The Axis Bank Story – Recent Performance

8

9

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

33%38% 40% 41%

45% 47% 50% 52%

Share of Retail in Advances

36%38%

43%45%

50%

55%

61% 62%

FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20

68%

75%78%

81% 81%84%

81% 80%

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Jun-19

10

The Bank’s Retail franchise continues to remain robust

Share of Retail in Deposits Retail Loan mix and share in Total 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

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%


Home loans Rural lending Auto loans PL

LAP CC SBB Others

PL – Personal Loan, SBB – Small Business Banking,

LAP – Loan against Property, CC – Credit Cards

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%

11

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%

19%

17%

8%

4%

Private Banks

Axis Bank (Domestic)

Axis Bank (Overall)

All Banks

PSBs

FY14-19 CAGR growth in Advances

12

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%

5.6%7.2%

8.2%9.8%

11.2%12.0% 12.7% 12.6%


3.9%

5.8%7.1%

8.0% 8.7%9.6% 10.2% 10.6%


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

13

Flipkart Axis Bank Credit Card

• Strong digital distribution channel

• Partnership with industry leaders as preferred merchants across categories

• Real time Issuance over Flipkart & existing Axis Bank channels

• Instant credit card issuance & usage on Flipkart

New Launch

We are among the top rated players in mobile banking

14

7.9%

9.3%

15.2%

21.8%

Player 4Axis BankPlayer 2Player 1

Mobile Transactions Market Share for Q1FY20

(by Volume)

Source: RBI data

2018 Global Rank

#14 vs. #32 in 2017

Among 42 leading banks worldwide

Axis Bank Mobile App

People’s Choice

Store Rating

4.64.6

15

Digital Channels contribute substantially to overall transaction, sourcing

and disbursement volumes

* Based on all financial transactions by individual customers

78% of all financial

transactions* were digital

Digital, 78%

ATM, 17%

Branches, 5%

Digital, 59%

Physical, 41%

59% of Savings Accounts

were sourced through Tab

Digital, 54%Physical,

46%

54% of Personal loans were

sourced through Digital channels

16

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


Provision for non-performing assets*

2,023 2,548 2,854

7,345

21,782

33,419

13,871

4,798


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%


GNPA and NNPA ratios

GNPA%

17

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%


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

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

18

Note: Classification based on client annual revenue – Commercial ( `10 cr- `250 cr); Mid (` 250 cr- ` 1000 cr); Large ( > ` 1000 cr)

19

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

New originations in Corporate Credit are more granular and Bond book is

being right sized

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

Corporate Bond portfolioConcentration Risk has reduced

significantly from peak

20

95% of sanctions in Q1FY20 was rated A-and above 95% of bonds rated A- and above

40,169

29,296

Mar-19 Jun-19

Outstanding Non SLR Corporate bond* book

*Only includes standard investments

21

In Retail, the Bank has held steady low levels of LTV and FOIR for new originations

61% 62%

Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19

Average LTV – HL Sanctions

48%43%


Average FOIR – HL Sanctions

39% 43%


Average LTV - LAP Sanctions

55%

41%


Average FOIR – LAP Sanctions

FOIR – Fixed obligation to income ratio

LAP – Loan against Property

HL

LAP

0.40x 0.40x

0.67x

0.76x0.78x

0.93x

Loan against Property Credit Card Home Loan Personal Loan Auto Loan Commercial Vehicle

22

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

23

14%

16%

10%

21%

15%

13%

3%

19%

17%16%

14%

-1%

18%

20%


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


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


Return on Assets (in %)

26.45

30.85

34.93

15.34

1.12

18.09

21.14


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 (`)

24* Q1FY20 figures are annualised

*

*

*

3.63%3.45% 3.38% 3.33% 3.46% 3.36% 3.47% 3.44% 3.40%

Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20

Global NIM

Operating performance metrics were strong during the quarter

25

2.87%2.39% 2.32% 2.20% 2.47% 2.21%

2.90% 2.60%2.97%


Operating Profit Margin

17%12%

24%

1%6%

9%

16%

23%26%


Fee income growth

Includes ~17 bps impact of

interest realization from recovery

on an IBC List 1 account

65%

60%

66% 65%

69%

73%75%

77% 78%

Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19

Provision Coverage Ratio

4.9% 5.4%

11.3%

8.1% 9.2%

Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20

Return on Equity*

* Annualised figures

2.17% 2.17% 2.17% 2.17% 2.16% 2.15% 2.15%2.13%

2.08%


Opex to Average Assets ratio*

Through various measures over the last few quarters, the Bank now holds additional provisions

of `2,358 crores

1 2

3 4

5 6

The Axis Bank Story – Strategy for FY20-22

26

27

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

28

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

19.7%

9.2%

18%

Avg FY11-15 Q1FY20 Medium termAspiration

ROE

29

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

30

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

• 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

31

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

32

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.

33

Safe Harbor

Thank you

35

Documents

Cautious, Conservative and Consistent Growth...Some other factors affecting corporates Source: RBI, IBBI, Axis Capital, Axis Bank Research ... Government’s measures to boost growth