Performance and Outlook

December 2015

Agenda

Macro Picture

Performance Highlights

Q&A

Agenda

Macro Picture

Performance Highlights

Q&A

Fundamentals (IIP)
Output conditions
Inflation
Rates
Credit and Deposit growth

Sep-14

Manufacturing

Sep-15

Electricity
IIP

Mar-15

Growth in IIP and Components

(% YoY, 3MMA)

Mar-14

Mining

Within manufacturing, capital goods

sector has been the star performer

Electricity up sharply in recent

months, particularly thermal power
generation

Manufacturing up almost 2X (4.1%

vs 2.2%)

On FYTD basis, IIP growth of 3.9% vs

2.9% last year

Core fundamentals have improved moderately in recent months

14%
12%
10%
8%
6%
4%
2%
0%
-2%
Sep-13

Source: MOSPI; Axis Bank Research

Select output indicators

However, signals from output indicators are mixed

Source: MOSPI; Axis Bank Research

Cement and steel production growth remain weak

Car production is increasing, but at a moderating pace
CVs had a better year, reflecting stronger commercial activity

CPI Inflation and components

10%

Food+ (45.9%)
Fuel+ (6.8%)
8%

6%

Core (47.3%)

12%

-2%
-4%

-6%

GDP Deflator

CPI vs WPI vs GDP Deflator

Inflation

CPI

WPI

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

YoY%

Inflation benign, extent of pricing weakness likely even higher

10%

8%
CPI Combined

5.34%
5.32% 2%
5.00%

4%

6%

4.4%

0%

4%

2%
Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15
Source: MOSPI; Axis Bank Research

Retail inflation (CPI) is ~5% in October, while Wholesale inflation is currently negative
GDP deflator, broadest inflation measure, is more aligned to WPI, reflects deflation in tradables

Base Rate

Apr-15

Oct-15

6.75

7.90

9.50

Repo Rate vs Axis Bank Lending and Deposit Rates (%)

10.25

1 year FD Rate

Oct-14

Repo Rate

9.00

7.75

Apr-14

Banks responded with significant

transmission;
35 bps in the case of Axis
Bank

50 bps rate cut by RBI in

September

RBI continues to ease rates and the easing is being transmitted by

banks, both on deposit and lending side

11.0

10.0

9.0

8.0

7.0

6.0
Oct-13

Source: Bloomberg; Axis Bank

Non-food credit growth at 9.2%; deposit

growth at 11.1%

Credit and deposit growth are near multi year lows, but retail credit
growth remains strong
Deposit growth (%, YoY)

Banking system credit and deposit growth

Non-food credit growth (%, YoY)

Sectorally, the credit story is all in Retail

20%

17%

Incremental credit to Industry and Services

continue to be negative, YTD

FY12

2.2
1.7

FY13

FY11

FY16

FY14

FY12

1.4
1.0

FY13

FY11

FY16

FY14

FY12

Apr May Jun Jul AugSep Oct NovDec Jan Feb Mar

FY15

Retail Credit Growth (FYTD, Rs Tn)

Retail growth strong, at 18%YOY, led by

unsecured lending and housing

14%

11%

FY11

FY14

FY15

0.6

1.2

Services Credit Growth (FYTD Rs Tn 1.8

)

8%
Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15

FY13

FY15

0.7

-0.2

0.2

Apr May Jun Jul AugSep Oct NovDec Jan Feb Mar

0.2
-0.3
Apr May Jun Jul AugSep Oct NovDec Jan Feb Mar

FY15

Industry Credit Growth (FYTD, Rs

Tn)

Sectoral Credit Growth

3.5

3.0
2.5
2.0

1.5
1.0
0.5

0.0
-0.5

Agenda

Macro Picture

Performance Highlights

Q&A

Includes profits for the half year; 2 Include extension counters; 3 Includes overseas subsidiary in UK

Consistently strong shareholder returns

The Bank continues to deliver strong growth and consistent shareholder

returns

10

Strong financial performance in H1FY16

As on 30th September 2015; 2 Includes profits for H1FY16

Conservatively provisioned 78% provision coverage ratio

Strong capital position Tier1 CAR 12.2% and Total CAR

15.4%

Strong growth in core operating revenue and profits

Strong CASA and RTD growth

CASA+RTD = 80% of total deposits
Retail advances growth of 27% YOY
Retail Loans now 40% of total loans

Retail franchise continues to gain traction

H1FY16 has seen satisfactory performance on most key outcomes

11

Fee Share H1FY16

Increasing amounts of fee coming from granular retail

business, and flow based transaction banking solutions

Continued diversification in sources of Fee Income

Robust growth in core fee line

Steady growth in NII (CAGR of 21% since FY12)

Core revenue streams have been growing steadily, providing a

!"#$%&'()*+( $#+,-.)/'#($#0#*&#(#*1,*#2
Net Interest Income (` Cr)

Fee Income (` Cr)

12

!"#$%&'()*'(*#&"+,-*./0*,"%'1"2-*-"+2*3(*-"+2

13

Our time-tested CASA franchise drives steady cost of funds and

healthy NIMs

CASA growth of 14%YOY on daily average basis

RTD forms 64% of total TDs
CASA+RTD forms 80% of total deposits

14

Asset quality of the Bank has been steady in turbulent times

In Q2, the Bank sold two assets, worth `1,820 cr to ARCs, against a consideration of `650 cr

We utilised `850 cr from contingent provisions built in prior quarters to absorb the write-off against these loans

15

Including extension counters

The retail franchise continues to grow strongly

154 new branches opened in H1

Continued momentum in Retail Advances now 40% of

advances book
Growth in Cards business continues to be extremely strong

Retail Lending Portfolio Mix

Card Spends

16

!"#$%!&!"'($)*+$,-*)"$').$/0)"0-$!)$"#0$1')234$-0"'!($4"-'"0&56$/(0'-$
customer outcomes are starting to become visible

The Awardwinning
Mobile App

Lime: An
integrated
money
management
platform

Ping Pay: The

multi-social
Payments App

17

Advances

CMS
Accounts

Current
Accounts

Transactions

Fees

The Corporate Bank is delivering robust growth in a slow market

Corporate
Banking

SME

SME loans (including non-retail agriculture loans) grew 9% YOY

18

18%

12%

18%

31%

11%

31%

16%

7%

60%

16%

6%

8%

15%

14%

6%

15%

6%

9%

7%

64%

9%

8%

63%

11%

7%

61%

7%

8%
8%

SME 1

Sep-15
SME 2

Jun-15
SME 3

Mar-15
SME 4

Dec-14
SME 5-7

Sep-14

12%

57%

Rating Distribution - SME

The growth in Corporate Banking has come with steadily improving

rating distribution, even in the face of significant downgrades

32%

20%

10%

Rating Distribution - Corporate Banking

15%

11%

15%

34%

11%

35%

11%

28%

11%

29%

9%

29%

9%

31%

9%

Sep-15

30%

AAA

Jun-15
AA

Mar-15
A

Dec-14

BBB

Sep-14

<BBB or unrated

!"#$%#&$'($')*+#),-).&+/#)'+#')*+,#012#$'#3+**+'#4.#5+(*+63+'#78!9
:9"#$%#5;<#),-).&+/#)'+#05;<=2#$'#3+**+'#4.#5+(*+63+'#78!9

19

In Summary, the Bank is in a great position in the competitive

environment
Financially strong:
o Healthy capital ratios; strong profitability ratios; moderate risk levels

Conservative provisioning
Solid retail franchise:

o Strong on both deposit and lending side; extensive network; loyal customer base

Strong capabilities in Corporate Banking:

o Increasing focus on Transaction Banking, over and above traditional strengths

Powerful Brand that resonates with the youth

Demonstrated, and continued, delivery of profitable growth

20

Agenda

Macro Picture

Performance Highlights

Q&A
&A

21