Axis Bank will look at infusing capital into its non-bank subsidiary, Axis Finance. The fast pace of growth that the subsidiary has seen is the key reason for capital infusion, said MD and CEO Amitabh Chaudhry.
“Right now we have the room for infusion and at the right stage, we’ll get RBI approval for this. If we are not able to, (get the approval) then we may rope in a private equity firm,” Chaudhry told BusinessLine.
“Axis Finance is doing very well. It has always had close to 20 per cent RoE (return on equity). It was a wholesale NBFC and they’ve added up to 30 per cent of retail loans,” he added.
The company reported a net profit of ₹364 crore for FY22, with revenue from operations of ₹1,514 crore. In Q1 FY23, the profit after tax was ₹95 crore on a revenue base of ₹471 crore. The overall RoE for FY22 was at 20.3 per cent and for Q1 FY23 was 15.4 per cent.
Assets under management of Axis Finance grew 59 per cent year-on-year to ₹19,011 crore as of June 30. Retail loans were up three-fold at ₹6,905 crore, comprising 36 per cent of the total loan portfolio at the end of June.
Monetising subsidiaries
Among the private sector lender’s other smaller subsidiaries, it could also look to infuse some capital in Axis Securities, Chaudhry said.
Axis Securities posted a net profit of ₹232 crore for FY22. For the first quarter of the current financial year, the profit was ₹39 crore, 30 per cent lower on year as the company said it made “significant investments” in talent during the quarter which impacted profitability.
The company, however, saw an increase of 63 per cent in trading volumes during Q1 FY23. The number of new clients added also rose by 148 per cent on-year, pushing the total customer base up 18 per cent to 43.6 lakh as of June 30.
When asked if Axis Bank is looking to monetise any of the subsidiaries, Chaudhry said not at the moment because the scale of these entities is not sufficiently large.
“We always wanted to retain 100 per cent (shareholding) because we need to first scale them up. Their ranks have improved but they are still not where we want them to be. So, we have some more time for monetization,” he said.