In the fourth quarter results announced after market hours on Tuesday, Axis Bank continued to increase its focus on retail loan portfolio. However, the bank’s overall loan growth, at 12 per cent year-on-year (yoy), was lower than other private peers that have reported their Q4 numbers so far. HDFC Bank witnessed a 14 per cent growth in domestic advances while ICICI Bank saw a 17.7 per cent growth.

Even the 12 per cent growth for Axis Bank was including the TLTRO investments worth ₹18,073 crore, which the bank is treating as part of advances.

Excluding this, the bank’s loan portfolio only grew by 9 per cent y-o-y to ₹6.24 lakh crore.

Axis Bank Q4 net jumps to ₹2,677 cr

Cautious growth in corporate book

Corporate book that comprises about 35 per cent of the bank’s advances grew by 7 per cent y-o-y. That said, about 94 per cent of the incremental sanctions were towards corporates rated ‘A-’ and above only.

The break-up of the bank’s industrial exposure (including investments, corporate loans and non-funded exposure), per the company’s presentation, reveals a sequential spike in the bank’s exposure to financial companies (banks, NBFCs, HFCs, MFIs and others), petroleum and petroleum products and power distribution and transmission companies. The bank’s exposure to these industries, at the end of March 31, 2021, was at 11.9 per cent, 4.75 per cent and 3.5 per cent respectively.

Axis Bank looks to strengthen position in insurance sector

Even within the TLTRO investments, the bank limited its exposure to AAA/AA rated corporate issuers only. Besides, it stayed clear of financial institutions and PSUs here.

Bigger retail book, but secured

The bank saw a 10 per cent y-o-y growth in its retail book, which now constitutes 54 per cent of its advances. Retail growth predominantly came from home loan (up 73 per cent y-o-y), loan against property (up 53 per cent y-o-y) and small business banking (up 71 per cent y-o-y) segments. With majority of the retail book comprising products such as home loans (36 per cent of the retail book), auto loans (12 per cent), loan against property (9 per cent) and small business banking (5 per cent), about 81 per cent of the retail portfolio of the bank is secured with collateral. The bank’s Loan to Value (LTV) Ratio for the overall home loan and loan against property portfolio is only at 52 per cent and 35 per cent, respectively.

Not only is the bank’s exposure to personal loans and credit card limited to 12 per cent and 4 per cent respectively (of the retail portfolio), the bank’s exposure to salaried segment in these products is also at 100 per cent and 63 per cent, respectively. This provides a cushion against any systemic shocks affecting its unsecured portfolio.

Drop in GNPAs

The bank reported a drop in GNPA numbers in the March 2021 quarter. GNPAs were at 3.7 per cent, down 116 basis points from March quarter last year. The bank’s provisions (including specific, standard, additional and Covid related), cover about 120 per cent of the bank’s bad loans.

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