Strong retail focus continues to support the performance of Axis Bank, the third largest private sector bank in the country.
The bank has significantly increased its exposure to retail lending in the last four years, thus de-risking its business model.
In the December quarter, the bank delivered 18 per cent growth in loans, higher than the banking sector’s 14.5 per cent.
This has been made possible largely due to the 33 per cent growth in retail lending.
Axis Bank’s 31 per cent annual loan growth from 2009-13 has been driven by its retail loan portfolio.
This segment now constitutes a third of the bank’s overall loan portfolio, a significant leap from 20 per cent in 2009.
Robust growth in the retail space has helped offset the slack in corporate lending, which delivered only 3 per cent growth in the December quarter.
If the retail push has helped deliver industry-leading growth on the lending front, it has also helped the bank build a stable deposit base.
The bank continues to focus on current, savings and retail term deposits.
The bank has been able to build a healthy savings deposit base by leveraging its branch presence in the metros.
CASA rises The 26 per cent annual growth in savings account deposits in the last four years has been faster than the average for its private sector peers.
In the December quarter, savings deposits grew 21 per cent. The CASA (current account, savings account) ratio, at 43 per cent of the total deposits, is 3 percentage points higher than that of last year.
The CASA per branch is around Rs 48 crore, largely at par with HDFC Bank.
This reflects the bank gaining market share in CASA deposits over the last four years, when its CASA per branch was just Rs 33 crore.
Also, to broaden the term deposit base, the bank has increased its share of retail term deposits. CASA and retail term deposits together contributed 78 per cent of overall deposits as at the end of the December quarter.
The bank’s growing retail deposit base has helped lower the cost of funds.
The net interest margin for the bank stood at 3.7 per cent in the December quarter, marginally more than in the corresponding period last year.
There was some pressure though on asset quality. The gross non-performing assets (GNPAs), steady at 1-1.1 per cent of loans for many quarters, increased marginally to 1.25 per cent in the December quarter.
The net NPA also increased from 0.37 per cent in the previous quarter to 0.42 per cent due to lower provisioning.
The provision-coverage, at 80 per cent over the last few quarters, fell by 2 percentage points during the quarter.