Healthy CASA growth, steady operating performance, resilient balance sheet
The Board of Directors of Axis Bank Ltd. approved the financial results for the quarter and year ended 30th June 2021 at its meeting held in Mumbai on 26th July 2021.
Axis Bank delivered a strong performance across segments in Q1FY22 despite the impact of second wave of Covid-19 cases in the period. The Bank and its staff remained focused on serving the needs of its customers during this difficult period. The Bank also used this opportunity to widen its leadership in the digital banking space. It announced a long-term partnership arrangement with Amazon Web Services (AWS) to accelerate its digital transformation programme which includes a plan to transition 70% of its applications and infrastructure on to cloud in the next few years. The Bank made significant progress on its ‘O-P-E-N’ digital roadmap with multiple initiatives in the quarter. Subzero – its proprietary design platform; a cutting edge Developers portal with over 120 additional APIs went live. Along with Freecharge, the Bank scaled up engagements for its ‘Buy Now Pay Later’ product. This proposition facilitates customers to make payments through a single click for their small ticket purchases backed by credit limit.
The Bank also completed the first edition of ‘Grab Deals Fest’, a mega sale event exclusively for its credit and debit card customers. The 10-day fest offered attractive deals for customers on two of the largest online shopping platforms – Amazon & Flipkart, and up to 45% cashback on 30+ elite brands. It received a phenomenal response from its customers, recording 25 times increase in sales compared to the standard volumes.
Axis Bank partnered with Mumbai Metro One and RuPay to launch ‘ONE MUMBAI’ Smart Card, an open loop, contactless card with all-in-one multi-utility use for travel, e-commerce & retail spends of Mumbaikars. The Bank also launched its ‘Send Money Abroad’ feature on the Axis Mobile App, offering an omni-channel experience for its customers to send money abroad 24/7, in over 100 different currencies. Further, Axis Bank entered into a strategic partnership with Jeep India to support their ‘go local’ strategy, offering best in class funding solutions to its new and existing customers.
Commenting on developments during the quarter, Amitabh Chaudhry, MD & CEO, Axis Bank, said: “Despite Wave 2 headwinds, we made tremendous progress this quarter on our strategy of building a high quality granular franchise, increasing our relevance in the lives of the customers and the communities we serve and building the best digital bank in the country. The journey we started two years back is gathering momentum with a strong balance sheet, conservative provisions and a steady operating performance supporting our aspirations. We continued to differentiate on our pioneering people and diversity initiatives. We have also set a bold mandate for our long-term ESG goals. We continue to monitor the macroeconomic environment closely and we remain confident about our strategy and the road ahead.”
Profit & Loss Account: Period ended 30th June 2021
Operating Profit and Net Profit
The Bank’s operating profit for the quarter grew 10% YOY to Rs. 6,416 crores while the core operating profit grew 13% to Rs. 5,896 crores. Net profit grew 94% from Rs. 1,112 crores in Q1FY21 to Rs. 2,160 crores in Q1FY22.
Net Interest Income and Net Interest Margin
The Bank’s Net Interest Income (NII) grew 11% YOY to Rs. 7,760 crores from Rs. 6,985 crores in Q1FY21. Net interest margin (NIM) for Q1FY22 stood at 3.46%.
Fee income for Q1FY22 grew 62% YOY to Rs. 2,668 crores. Retail fees grew 76% YOY; and constituted 62% of the Bank’s total fee income. The corporate & commercial banking fee grew 42% YOY. The trading profits and miscellaneous income for the quarter stood at Rs. 499 crores and Rs. 421 crores respectively. Overall, non-interest income (comprising of fee, trading profit and miscellaneous income) for Q1FY22 stood at `3,588 crores, up 39% YOY.
Provisions and contingencies
Specific loan loss provisions for Q1FY22 were Rs. 3,151 crores compared to Rs. 3,512 crores in Q1FY21.
The Bank has not utilized Covid provisions during the quarter. The Bank holds cumulative provisions (standard + additional other than NPA) of Rs. 12,425 crores at the end of Q1FY22. It is pertinent to note that this is over and above the NPA provisioning included in our PCR calculations. These cumulative provisions translate to a standard asset coverage of 2.05% as on 30th June, 2021. On an aggregated basis, our provision coverage ratio (including specific + standard + additional + Covid provisions) stands at 118% of GNPA as on 30th June, 2021.
Net Credit cost for the quarter ended 30th June 2021 was 1.70% as compared to 2.11% in Q1FY21.