Top Indian Companies: Axis Bank Limited

Axis Bank Limited, formerly known as UTI Bank (1993–2007), is an Indian banking and financial services company headquartered in Mumbai, Maharashtra. It sells financial services to large and mid-size companies, SMEs and retail businesses.

The bank was founded on 3 December 1993 as UTI Bank, opening its registered office in Ahmedabad and a corporate office in Mumbai. The bank was promoted jointly by the Administrator of the Unit Trust of India (UTI), Life Insurance Corporation of India (LIC), General Insurance Corporation, National Insurance Company, The New India Assurance Company, The Oriental Insurance Corporation and United India Insurance Company.

In 2001 UTI Bank agreed to merge with Global Trust Bank, but the Reserve Bank of India (RBI) withheld approval and the merger did not take place.

On 30 July 2007, UTI Bank changed its name to Axis Bank.

In 2013, Axis Bank's subsidiary, Axis Bank UK commenced banking operations.

Subsidiaries

Axis Capital Ltd.

Axis Capital Ltd. was incorporated in India as a wholly owned subsidiary of the bank on 6 December 2005 and received its certificate of commencement of business on 2 May 2006.

1. Axis Finance Ltd. (formerly Enam Finance Pvt. Ltd.)

2. Axis Securities Europe Ltd. (formerly Enam Securities Europe Ltd.)

3. Enam International Ltd., UAE (voluntarily dissolved with effect from 24 August 2014)

Axis Securities Ltd., Axis Finance Ltd. and Axis Securities Europe Ltd. later became direct subsidiaries of the bank in line with the RBI directives.

Axis Private Equity Ltd.

Axis Private Equity Ltd. was incorporated in India as a wholly owned subsidiary of the bank on 3 October 2006 and received its certificate of commencement on 4 December 2006. APE manages investments, venture capital funds and offshore funds.

Axis Mutual Fund

Axis Mutual Fund is a subsidiary of Axis Bank established in 2009 with in headquarters in Mumbai.

Shareholding Pattern - Axis Bank Ltd.

Holder's Name No of Shares % Share Holding

No Of Shares 3067661758 100%

Promoters 291356548 9.5%

Foreign Institutions 1423392642 46.4%

Banks Mutual Funds 677877013 22.1%

Others 204735317 6.67%

General Public 174502536 5.69%

Financial Institutions 228609407 7.45%

GDR 67188295 2.19%

Axis Bank reported a Rs 5,361 crore loss on a consolidated basis for the January-March period against a net profit of Rs 4,417 crore a year ago, impacted by the Rs 12,490 crore payout towards the Citi acquisition.

On a standalone basis, the third largest private sector lender reported a Rs 5,728 crore loss against a net profit of Rs 4,117 crore in the year-ago period, and Rs 5,853 crore in the preceding December quarter.

Its managing director and chief executive Amitabh Chaudhry told reporters that the impact of acquiring Citi's retail businesses is a one-time one, and if one were to exclude the same, the net profit would have grown by over 61 per cent on a year-on-year basis.

The bank's core net interest income grew 33 per cent to Rs 11,742 crore driven by a 0.73 per cent expansion in the net interest margin at 4.22 per cent and an over 20 per cent growth in advances. The other income grew 16 per cent to Rs 4,895 crore during the quarter.

Its chief financial officer Puneet Sharma said 41 per cent of the bank's overall loan book is linked to the repo rate, which got a margin benefit due to the hiking rates cycle, but added that there were other factors like the loan book composition and the deposit accretion – 47 per cent of its base is the low cost current and savings accounts – which helped the margins.

Its overall deposit growth came at 15 per cent for FY23.

Sharma said that the bank has chosen to take the entire impact of the Citi acquisition, including the amortization for goodwill and other intangibles in this quarter itself, and added that the one-time hit also included the cost of harmonising of provisions because it is more conservative than the American lender.

At present, the loans from Citi constitute 3.5 per cent of the overall loan book for Axis Bank, and a relatively much higher benefit has come to the unsecured credit cards portfolio.

Chaudhry said the bank has seen a 4 per cent rise in deposits from Citi customers since January 31.

It has reported a 24 per cent jump in domestic corporate advances in the quarter, and its deputy managing director Rajiv Anand said it sees a strong pipeline of loans.

Anand said the corporate loan demand is both refinance and fresh lending and the bank also sees some pick-up in the private capital expenditure, which he feels will continue in FY24 as well.

The credit pricing environment is also conducive to loan growth, he said.

The bank does not see any stress in any loans in small and medium enterprises and corporate loans across sizes, Anand said.

Its overall gross non-performing assets ratio came down 0.88 per cent to 2.82 per cent, despite gross slippages of over Rs 3,300 crore. The overall provisions declined to Rs 305 crore against Rs 987 crore in the year-ago period.

The unsecured portfolio witnessed high growth, especially after the blending of Citi's portfolio, but the bank said it does not see any concerns about stress from this portfolio.

Its overall capital adequacy stood at 17.64 per cent, with the core capital buffer at over 14 per cent.

The bank board has on Thursday approved a proposal to raise up to Rs 35,000 crore through various instruments to shore up its non-core tier-II capital.

Axis Bank scrip closed 0.76 per cent down at Rs 881.05 apiece on the BSE against a gain of 0.58 per cent on the benchmark.

Brokerage Outlook

On business front, credit growth (14% YoY & 7% QoQ) and healthy deposit growth (18% YoY & 5% QoQ) were superior against previous quarter. The future outlook of asset quality is at manageable level as the strong standard asset coverage (2.1% of gross loans) is likely to absorb delinquencies from restructuring.

In view of adequate covid buffer, glimpse of growth rejuvenation and manageable restructuring pool, we have a positive outlook with BUY rating.

LKP Research, brokerages, value the standalone bank at PBV of 2.1xFY23E Adj. BVPS of ₹421 to arrive at a target of ₹884. LKP recommend BUY with potential upside of 25% from current levels.

ESG and Sustainability

As one of India’s largest lenders in key growth sectors such as infrastructure, metals & mining, power generation, real estate and manufacturing, we are committed to ensuring that our operations demonstrate our organization’s highest commitment to applicable national laws and relevant international standards on environmental and social sustainability.

By adopting the Environment, Social & Governance (ESG) Policy, we further demonstrate our resolve to drive our country’s economic growth by being providers of responsible, sustainable finance. We also intend to partner with our clients to achieve compliance to the ESG Policy and to influence other banks and financial institutions in adopting principles of sustainable finance.