Axis Bank (AXISBANK)
Why the stock moved
Strong retail loan growth of 20% YoY; asset quality showing marked improvement with slippage ratio declining.
In-depth analysis
Axis Bank's retail-focused strategy is yielding results with retail loans growing 20% YoY and now constituting 62% of total advances. Asset quality improved significantly with GNPA ratio declining to 1.43% from 1.85% year ago. The bank's digital initiatives including 'Axis Mobile' and WhatsApp banking driving customer acquisition with 15 million new customers added.
Key highlights
- Retail Focus: Retail loans up 20% YoY, now 62% of total book
- Asset Quality: GNPA improved to 1.43% from 1.85%, slippages down 35%
- Fee Income: Non-interest income up 18% driven by transaction banking
- CASA Ratio: Improved to 44%, up from 42% last year
- Digital Growth: 15 million new digital customers, 3.5 million credit cards
Outlook
Management guides for 13-15% loan growth in FY25 with continued focus on retail and SME. NIM expected to stabilize at 3.9-4.0%. Credit cost targeting sub-60 bps with improving asset quality. ROA target of 1.8-2.0% over next 2 years. Investment in technology and digital banking to enhance customer experience and reduce cost-to-income ratio to below 45%.
Risk factors
Corporate loan book still has legacy stress assets. Microfinance and unsecured personal loan segment showing early stress. Competitive pressure in retail lending affecting spreads. Branch expansion costs impacting near-term profitability.