Cost-to-assets target of ~2% by FY25 exit (ex-Citi)
Management reiterated guidance of cost-to-assets around 2% by FY25 exit, excluding Citi business costs.
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Integration expenses of INR 2,000 crore pre-tax over 18 months
Citi integration costs expected to total INR 2,000 crore pre-tax (INR 1,500 crore post-tax), with INR 385 crore incurred in Q1.
Branch expansion of ~400 branches in FY24
The bank plans to add around 400 branches this fiscal year, focusing on white spaces.
Digital business (Axis Two) to increase 3-4x by FY27
Axis Two currently ~5% of overall business; target to increase contribution 3-4 times by FY27.
Advances growth 300-400 bps above industry
Management expects advances to grow 300-400 basis points faster than industry over the medium to long term, contingent on deposit availability.
Credit cost not indicative of full year
Q1 annualized net credit cost of 0.97% is not reflective of full-year expectations due to timing differences in recoveries.
Operating expense growth moderation
Expense growth will moderate through FY25 from the 27-29% YoY range seen last year.
Advances growth 300bps faster than industry
Management expects the bank's loan growth to outpace industry average by 300 basis points in the medium term (3-5 years with FY26 as base).
NIM of 3.8% on a two-cycle basis
The bank targets a net interest margin of 3.8% over a two-cycle period starting from the last rate cut, with margins expected to follow an inverted C trajectory.
No further policy changes unless regulation changes
Management confirmed that the technical recognition changes are a one-time adjustment and no further policy changes are expected unless regulatory norms change.
Loan growth 400-600bps above system
Management expects Axis Bank to grow loans at 400-600 basis points faster than the banking system credit growth of ~13% for FY24.
500 branch additions in FY24
The bank plans to add 500 branches in FY24, with 207 added in Q2 and 110 new centers.
Cost-to-assets target of ~2.1% by FY25
Management targets cost-to-assets ratio of around 2.1% by FY25, including Citi business, down from 2.41% in Q2 FY24.
Open by Axis Bank to contribute 3-4x by FY27
Digital banking platform Open currently ~5% of bank's business; management intends to increase contribution 3-4 times by fiscal 2027.
Medium-term loan growth 300-400 bps above industry
Management reiterated that advances can grow 300 to 400 basis points faster than industry in the medium to long term.
Deposit growth to remain a key constraint in short term
Given regulatory focus on CD ratio, deposit growth will be a key constraint for advances growth in the short to medium term.
Cost growth moderation to continue
Management expects pace of cost growth to moderate, having delivered 9% YoY growth in Q2.
NIM to bottom in Q3 FY26
Assuming no further rate cuts, net interest margin is expected to bottom in Q3, with through-cycle stance at 3.8%.
Advances growth 300 bps above industry in medium term
Over 3-5 years with FY26 as base, advances are expected to grow 300 bps faster than industry.
One-time standard asset provision of INR 1,231 crore to reverse by March 2028
The provision is static and will be written back when loans are closed or by 31 March 2028, whichever is earlier.
System credit growth to converge to ~13%
Management expects system credit growth to moderate towards deposit growth of around 13% due to tight liquidity.
Medium-term loan growth 400-600bps above industry
Axis Bank maintains its medium-term guidance of growing loans 4-6 percentage points faster than the industry, though not on a quarter-to-quarter basis.
Citi data migration and system integration by H1 FY25
The bank expects to complete data migration and system integration of the acquired Citibank business by end of first half of FY25.
No equity capital raise planned
Management reiterated that the bank does not intend to raise equity capital, citing organic CET1 accretion of 39bps in 9M FY24.
Medium-term loan growth 300-400 bps above industry
Management expects advances to grow 300-400 basis points faster than industry in the medium to long term, driven by focus segments.
Deposit growth to remain a key constraint in short term
Deposit growth will be a key constraint for advances growth in the short to medium term, given regulatory focus on CD ratio.
No need for equity capital; may issue Tier 2/AT1
Bank does not need equity capital for growth or protection; may opportunistically evaluate Tier 2 and AT1 instruments.
Through-cycle NIM target of 3.8% reiterated
Management reaffirmed the 3.8% NIM target over the cycle, despite 125 bps of repo rate cuts.
Deposit growth to converge with credit growth in 15-18 months
CEO expects deposit growth to stabilize at similar levels as credit growth within 15-18 months, aided by sustained liquidity infusion.
Retail loan book rebalancing over planning horizon
Management expects to rebalance the loan mix to 58-60% retail, 23-25% wholesale, and balance SME over the planning horizon.
Medium-term loan growth 300-400bps above industry
Management expects to grow advances 300-400 basis points faster than the industry over the medium to long term (3-5 years).
System credit growth to converge to deposit growth of ~13%
Management expects system credit growth to converge towards deposit growth of around 13% for the fiscal year.
Backbook repricing to finish in Q2 FY25
CFO stated that if marginal cost of funds remains current, backbook repricing should be completed in Q2 of FY25.
No need for equity capital for growth or protection
Management reiterated that the bank does not need equity capital for either growth or protection pillars; capital raise resolution is purely enabling.
FY26 credit cost may be marginally higher than FY25
Due to tightened classification norms for certain accounts (e.g., OTS), slippages in FY26 could be marginally higher than FY25.
Personal loan portfolio to stabilize in a few quarters
Underwriting corrections on personal loans are showing early positive reads, but full stabilization will take a few more quarters.
NIM cushion of ~18 bps above through-cycle guidance
Management aims to retain as much of the 18 bps cushion above the through-cycle NIM of 3.8% as possible, using mix and repricing levers.
Through-cycle NIM target of 3.8%
Management expects to achieve a through-cycle NIM of 3.8% within 15-18 months from the last rate cut transmission.
Retail-commercial mix target of 70:30
The bank aims to maintain a retail and commercial banking advances mix of approximately 70% of total advances, plus/minus 3-4%.
No equity capital requirement for growth
Management reiterated that the bank does not need equity capital for growth or protection; may issue Tier 2/AT1 instruments opportunistically.