Axis Bank Ltd — Q2 FY24
Axis Bank delivered a strong Q2 FY24 with PAT of INR 5,864 crore (+10% YoY) driven by robust core operating profit growth of 19% YoY in H1.
bullish
high
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Claim Ledger
Did management answer the analysts?
Every material analyst question, graded on whether management actually answered it — with the verbatim exchange and quantitative claims checked against filed numbers.
58%Questions answered3Evaded / deflected12Questions audited
Evasive
High priority
Quantify non-recurring item in other OpEx and guidance on near-term OpEx growth.
Asked by Mahrukh Adajania, Nuvama Wealth Management
Management acknowledged the one-time item but declined to provide the specific quantum.
refused to quantifyno number given
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Question
Puneet, you mentioned that there is some non-recurring item in other OpEx, explaining the steep QOQ increase in that item. So could you quantify it?
Puneet Sharma, CFO
We're not putting the absolute number out on what the quantum of the one-timer is on a QoQ basis. I just want to clarify for you that we've done two things on operating expenses...
Evasive
High priority
Will deposit growth align with loan growth and impact on deposit quality?
Asked by Mahrukh Adajania, Nuvama Wealth Management
CEO listed levers but avoided giving a clear timeline or target for deposit growth alignment.
no commitmentrefused to give guidance
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Question
However, the deposit growth is lagging loan growth. Obviously, you had excess LCR, which you could have used, and you have, but do you have any more excess LCR, or now will deposit growth be in line with loan growth?
Amitabh Chaudhry, MD and CEO
We have various levers in hand, which is going after term deposits to support our balance sheet, look at our outflow rates... I don't want to get boxed into how it will play out in the next or the next couple of quarters.
Partial answer
Medium priority
What is the ceiling for loan-to-deposit ratio?
Asked by Chintan Joshi, Autonomous Research
Answered with LCR range instead of loan-deposit ratio ceiling, partially addressing the concern.
reframed the question
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Question
In terms of the levers you have, how high are you willing to let the loan deposit ratio go up? I appreciate it will fluctuate quarter from quarter, but what is the kind of ceiling that we can think of in terms of loan deposit ratio?
Rajiv Anand, Deputy Managing Director
The metrics that we work off is LCR... our LCR bobs around between 115 and 120. That's the range that we like to keep it.
Answered
Medium priority
Potential to release provisions into capital?
Asked by Chintan Joshi, Autonomous Research
Clearly stated no intention to release provisions, with a timeline for future decision.
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Question
I'm wondering if there is potential of release into, into capital, into equity here at some point in the future? Or do you hold these provisions against kind of identified issues?
Amitabh Chaudhry, MD and CEO
Our intention at this point in time... is that we have no intention of releasing our COVID provisions. By March 2024, we will take a call... but our intention is not to write back any of it at this point in time.
Answered
Medium priority
Why retail card fees growth (39% YoY) lags credit card spends growth (72% YoY)?
Asked by Param Subramanian, Nomura
Explained the disconnect with fee composition and Citi portfolio impact.
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Question
So if I look at the retail card fees, which you've disclosed, it's up 39% YOY. The spends, the credit card spends you are showing is up 72%. So I just wanted to understand what's the reason for the disconnect there?
Amitabh Chaudhry, MD and CEO
The fees number... represents an overall holistic view on all nature of fees, and it wouldn't be exactly linearly, mathematically correlated with the spends. Also, do keep in mind that the year-on-year growth in spend also represents the acquired portfolio of Citi...
Partial answer
High priority
How far along is term deposit repricing and what drove loan yield expansion?
Asked by Param Subramanian, Nomura
Gave qualitative drivers but did not quantify how far along repricing is or segment contributions.
no specific quantificationvague on repricing progress
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Question
So how far along are we on the term deposit repricing? And secondly, this quarter we've actually shown an expansion in the loan yields... I just wanted to understand perhaps directionally, you know, what segments are driving this expansion in yields...
Amitabh Chaudhry, MD and CEO
It partly reflects the fact that our overall loan mix has changed... we are driving cost of funds, we are driving the RITL numbers, we are driving how we can change the product mix, we are driving the overall yields.
Answered
High priority
RBI caution on personal loans and stress in sub-INR 50k segment.
Asked by Abhishek Murarka, HSBC
Acknowledged stress and provided details on exposure and risk management.
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Question
Can you talk a bit about, you know, there have been indications by the RBI that it is a little cautious about it. You yourself, I think, last quarter had mentioned that there was some pressure in the less than INR 50,000 ticket size segment.
Amitabh Chaudhry, MD and CEO
We are seeing stress build up in loans below INR 50,000. Our share of loans below INR 50,000 is much smaller. I'll ask Sumit and Puneet to expand.
Answered
Medium priority
When will home loan growth traction improve?
Asked by Kunal Shah, Citigroup
Provided specific disbursement growth and book growth figures, indicating improving momentum.
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Question
When we look at it, it's like much a lower pace, hardly like 2% sequential growth, 9% year-on-year. So when do we actually see the traction and building up and the initiatives out there?
Sumit Bali, Group Executive of Retail Lending
Our quarter on quarter home loan disbursement is up 26%. If I look at our previous quarter number, our book was quarter on quarter -0.05%. This quarter it is +2%, so we are good, seeing good momentum build up.
Evasive
High priority
Comfortable level for unsecured book as percentage of total?
Asked by Saurabh Kumar, JP Morgan
Avoided giving a target percentage for unsecured book, instead discussed RWA intensity.
no specific percentage givenreframed to RWA intensity
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Question
To what level would you be comfortable taking your unsecured book to? It's about 11 odd %, but directionally, what level could you take it to?
Puneet Sharma, CFO
The RWA intensity of the portfolio is not changing. I mean, it's been around, it's bobbing around 66%-67% for the last, you know, 6-8 quarters. I think that should give you an indication of how we are thinking about risk.
Partial answer
Medium priority
What is the like-to-like cost-to-assets ratio excluding Citi?
Asked by Jai Mundhra, ICICI Securities
Provided a target (2.10%) rather than the actual current like-to-like ratio.
gave target not actualno exact current number
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Question
We have given that we are committed to 2.0% OpEx to cost, and that is excluding Citi expenses and integration. So if you can tell us, what is the number right now if we were to exclude Citi expenses and integration?
Puneet Sharma, CFO
Adjusted for Citi against the 2.41% that we have reported in the current quarter, the outlook will be around 2.10, would be the target as we would stand.
Answered
Medium priority
What explains the increase in loan yield despite stable loan mix?
Asked by Piran Engineer, CLSA India
Listed multiple specific drivers for yield expansion, providing a clear explanation.
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Question
What explains the increase in loan yield when loan mix has largely been the same? Is it fair to say that there's some lagged impact of MCLR hikes... or have you increased rates across product?
Puneet Sharma, CFO
One is portfolio composition, which is retail SME wholesale, but there's another driver under that, which is the product mix. Further, there has been a driver, which is RIDF reductions... Lastly, there is a driver on the currency composition of the advance book.
Partial answer
Medium priority
Branch expansion plans and levers to reduce cost-to-assets by FY25.
Asked by Nitin Aggarwal, Motilal Oswal Financial Services
Answered branch expansion but only partially addressed cost-to-asset reduction levers.
did not address cost-to-asset levers fully
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Question
We have seen a pickup in branch expansion this quarter. So how are we looking at the trend? And also, given a specific guidance on cost to asset, what sort of branch expansion are we making in over FY25?
Rajiv Anand, Deputy Managing Director
We are looking at doing about 500 branches this fiscal, and we are on the path to delivering that.