Axis Bank’s managing director and chief executive officer Amitabh Chaudhary, who took charge in January, has fired up all the growth burners. His single-minded focus seems to be on achieving profitability and a Return on Equity (RoE) of 18 per cent by FY22. In order to get there, Chaudhary has deployed multiple levers including a thrust on the retail portfolio, which comprises about 50 per cent of the bank’s total loan book, besides beefing up the MSME, corporate and overseas loan book. Management rejigs also finds Pralay Mondal and Ganesh Shankaran leading the retail and wholesale segments.
Within retail, though deposit traction remained robust led by term deposits that grew over 44 per cent as on March 2019, Chaudhary believes more needs to be done since CASA growth remained flat over last year. Interestingly, CASA and retail term deposits together account for over 81 per cent of the deposit base, but the management wants retail term deposits to scale up further. To ensure that the bank’s staff pursue this, branch head KRAs were reviewed to include retail term deposits as opposed to CASA growth until now.
Analysts say, given that public and private lenders continue to be cautious on corporate loans, competition for retail customers is fierce. Moreover, with Axis’ savings accounts growth remaining subdued in FY19, and given its retail term deposits focus, Edelwiess Research noted that there could be some cannibalisation from savings balances.
Overall loan growth printed below 13 per cent led by a 29 per cent dip in overseas loan book, but Chaudhary appears confident of stabilising this over the next two quarters. In contrast, the domestic loan portfolio remained a bright spot clocking a healthy 18 per cent growth, higher than the industry average, despite corporate growth turning soft.
It was retail loan book, which grew 19 per cent, that propped up the bank’s overall loan growth. Going forward, retail growth appears unstoppable led by personal loans, credit cards and auto loans, though the former two may need a stronger push considering their vast potential.
As for asset quality, with the bank sufficiently providing for stressed assets, financial parameters could be better in the coming quarters. Though much of the underlying stress was already covered, the bank is expected to undertake another review on provisions in the next two months for potential changes. The third-largest private sector bank in terms of asset size, with a balance sheet of `8 lakh crore, has a network of over 4,050 branches.