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Message from
MD & CEO

Staying true to our ethos of customer centricity, our 78,000+ team members collectively and individually went above and beyond their call of duty to serve our customers, our communities and most importantly our nation and the economy during one of the most challenging phases of our lifetime.

- Amitabh Chaudhry

Dear Shareholders,

Fiscal 2020-21 was truly an extraordinary year in history. The unprecedented health crisis that still continues to unfold across the country, brought the best out of us as we made steady progress towards our medium-term GPS objectives while delivering on our ‘Dil Se Open’ promise to our stakeholders

Through the year, our support to customers and communities in helping them emerge from the COVID pandemic remained unwavering. I am proud of the commendable efforts and character displayed by all the team members of Axis family. I would also like to thank all the COVID Warriors for the tremendous job that they have been doing, especially the healthcare professionals, who are constantly fighting all odds to save thousands of lives.

Through the year, our support to customers and communities in helping them emerge from the COVID pandemic remained unwavering. I am proud of the commendable efforts and character displayed by all the team members of Axis family. I would also like to thank all the COVID Warriors for the tremendous As the economy continues to combat the second wave of unprecedented COVID-19 pandemic, we as a Bank reiterate our commitment of being ‘Open’ to our customers’ needs, concerns, challenges and aspirations. My heart goes out to all who have been directly impacted by the pandemic. However, the fast pace of vaccination and slowdown in new infections in several states do provide hope. I am confident that we can and will come out of this together.

Despite the challenges that came our way in 2020, our proactive approach towards strengthening the organisational core and technological capabilities, along with focused execution helped us overcome the odds. Significant investments in digital banking, adopting a cloud-first technology and analytics-driven decision-making definitely helped us deliver strong operational performance. Every passing quarter we improved, led by our focus on building granularity across business segments and ‘One Axis’ philosophy to drive sustainable and profitable growth. At the same time, we continue to remain prudent and conservative in fortifying our balance sheet and enhancing our capital levels in an uncertain environment, we all are hoping is short lived.

During the fiscal, we witnessed consistent and strong sequential growth in deposits, advances and fees. Our focus towards building a quality liability franchise saw sustained momentum with 18% growth in average granular retail deposits consisting of CASA and RTD deposits. Our advances grew 9% y-o-y led by quality growth across our Retail, Commercial Banking (CBG) and Corporate banking segments. The operating profitability continued to remain steady with 16% growth in net interest income and 10% growth in operating profits, despite our prudent stance on accounting policies. Our focus on granularity in fees continued to play out well with the share of granular retail and transaction banking, including forex-related fees increasing to 83%. We also continued to deliver on our profitability vector of improvement in efficiencies across our businesses, with reduction in cost to average assets to 1.96% from 2.09% in previous fiscal.

We remained proactive and prudent in our approach towards provisioning and policies and had been very selective towards restructuring and ECLGS. Over the year, we took several actions across accounting and provisioning policy changes to ensure that our balance sheet remains resilient across cycles. We increased our provision coverage ratio from 69% to 72% while also building significant additional non-NPA provisioning buffers of over `12,000 crores, which translates to standard asset coverage ratio of 1.95%. Further, our rule-based provisioning norms have ensured that NPAs are provided early and adequately. The Bank’s net NPA declined from 1.56% to 1.05% and the fund-based BB and below book remained flat in percentage terms as compared to the last fiscal.

During fiscal 2020-21, the Bank successfully raised `10,000 crores of capital. This strengthened the Bank’s capital ratios further, with total adequacy of 19.12% and CET1 ratio of 15.40%. The Bank's strong balance sheet and healthy capital position ensures that we enter this cycle from a position of strength.

In fiscal 2021, the Bank successfully raised `10,000 crores of capital, this strengthened the Bank’s capital ratios further, with total adequacy of 19.12% and CET1 ratio of 15.40%. The Bank's strong balance sheet and healthy capital position ensures that we enter this cycle from a position of strength.

As an organisation we have been constantly evolving, challenging ourselves to raise the bar on innovation and strengthening our core, to transform into a more agile and future-ready organisation. We have been working towards our goal to deliver distinctive and world-class customer experience through an optimal mix of human touch and technology.

During the year, we continued to strengthen the core pillars of our franchise – people, products and technology for driving executional excellence. We made some important organisational structure changes in wholesale and retail segments to streamline and simplify our functioning and bring in greater accountability, productivity and efficiencies. We also bolstered our leadership team significantly with our existing leaders taking on larger and newer responsibilities, while we brought in new talent who had the breadth and the experience to match our aspirations.

The pandemic also accelerated the technology investments and execution of transformation projects. We significantly ramped up the opex and capex spends in technology towards modernising the core systems, scaling up the Cloud portfolio for supporting the real-time business models and building resilience across our operations. We adopted a cloud-first approach for our digital banking platform with over 50 initiatives on cloud, which is one of the highest in this area within the Indian financial service sector.

During the year, we started a multi-year technology transformation programme that will accelerate our journey towards our goal of being a sustainable future-ready Bank. We have made significant investment in the ‘Business Solutions Group’ to drive innovative technology solutions and build greater collaboration between business and technology. We have adopted agile methodology with multiple cross-functional squads working on over 220 high-priority, organisation-wide transformation projects.

The execution of these projects have largely remained on track with 50% of them fully completed with promising outcomes in the form of reduction in turnaround times, improved productivity and better customer experience. The implementation of tech-driven transformation project ‘Sankalp’ in our CBG segment, for example, has helped in reducing the loan approval time by nearly 75% while pushing the productivity of RMs up by 2 to 3 times.

Our investments towards strengthening our operational and technological infrastructure well before the outbreak of pandemic in India ensured that all our critical operations were executed on time. Almost all of our branches and ATMs too remained functional following all the health safety and regulatory guidelines. We implemented one of the largest Work-From-Home programmes in the industry with over 20,000 concurrent users who were able to work remotely with access to all the Bank systems. Further almost all of our team members co-ordinated seamlessly amongst themselves and external stakeholders using the collaborative tools. We also enabled over 60,000 frontline team members on Bring Your Own Device (BYOD) environment, thereby helping them to maintain connect and serve customers during the pandemic. We also strengthened our digital collection infrastructure that helped in higher demand resolution during the year.

The Bank has over the last decade built a strong Retail franchise with powerful distribution network, wide deposit customer base and robust data analytics capabilities that have enabled us to grow our business in challenging time period.

On the deposits side, our focus on deepening existing liability relationships and acquiring the quality customers as part of premiumisation strategy continued to progress well. During the year, we acquired over 6.7 million new liability relationships including over 2.8 million new savings account relationships that had higher average balances across retail savings and premium segment accounts. Our emphasis on acquiring top corporate relationships in salary segment resulted in 25% y-o-y growth in our salary deposits book.

During the year, our domestic retail advances book grew 11% as we continued with our focus on growing the secured retail lending products segment like home loans, LAP, SBB that grew by 12%, 20% and 30% y-o-y respectively. Our disbursements across the secured segments continued to improve sequentially through the year and touched new highs aided by improvement in operational processes and focused execution.

Over the last two years, we have initiated several large process transformation and technology initiatives across our branches and other distribution channels to bring in effectiveness and efficiencies while delivering distinctive and seamless omnichannel experience to our customers. During the year, we sourced over 70% of retail assets from existing Bank customers; with ~56% contribution from our branches.

Our Deep Geo initiative continued to scale well as we expanded coverage to 1,577 branches and enrolled over 13,600 Common Service Centres (CSCs) to deepen presence in rural and semi urban markets. The deposits from our Deep Geo branches grew 19% y-o-y while the disbursements grew 59%.

We have also increasingly been leveraging our alternate Axis Virtual Centre (AVC) channel that has over 1,500 virtual relationship managers across six centres to deepen relationships and scale up growth. This channel continues to play an important role in reaching out to customers with over 3 million customer contacts every month.

Our Deep Geo initiative continued to scale well as we expanded coverage to 1,577 branches and enrolled over 13,600 Common Service Centres (CSCs) to deepen presence in rural and semi urban markets. The deposits from our Deep Geo branches grew 19% y-o-y while the disbursements grew 59%. As a result of our weekly region specific and focused product drives, strategic partnerships with agri-corporates and digital enablement of processes, our overall rural loan book grew 17% y-o-y

We continued to maintain our strong positioning across the cards and payments businesses as we focused on growing this segment profitably in a manner that meets our risk and return hurdles. We have built strong partnerships with large players in retail payments space, that now form the core of our Known to Bank (KTB) strategy through which we intend to scale up our business further. During the year, we sourced nearly 2 lakh credit cards through our partnerships with Flipkart and Google Pay. In the UPI space, we further strengthened our position in fiscal 2020-21 with a market share of 17% as Payer PSP. The Bank now has partnerships with all the major thirdparty UPI apps in the ecosystem with more than 186 million customer VPAs registered as on 31 March, 2021. Our Mobile Banking platform continues to be recognised as one of the highest rated financial apps in the country.

Our wealth management business ‘Burgundy’ continued to grow strongly with its AUM growing 45% y-o-y to cross `2 trillion mark. Our vintage team of relationship managers, wealth specialists and advisors, along with our strong product portfolio offerings helped to scale up our ‘Burgundy Private’ proposition to cover over 1,660 families with assets of nearly `50,000 crores in just 15 months since its launch.

Our third-party products distribution business in Retail that we had created in fiscal 2019-20 to have a dedicated focus delivered strong 30% y-o-y fee income growth on back of contextual product launches and enablement of digital processes. In our retail forex business where we are one of the largest players, we launched outward remittance on mobile app and fully digital forex card issuance platform to further enhance the customer proposition.

We have made strong progress in our Digital Banking initiative that we had started in fiscal 2019-20 with the objective of not only reimagining end-to-end customer facing propositions, but also to scale up growth and productivity. We have 800-plus people fully dedicated to digital transformation of the Bank including a strong in-house full stack technology team of 110 people in roles across design, front-end and back-end development, DevOps, Quality Assurance etc.

We have adopted OPEN approach towards reimagining customer journeys which involves rebuilding entire journey with ‘zero’ operations orientation using ‘proprietary’ in-house capabilities and delivering solutions that are ‘Ecosystems’ capable and metrics oriented. During the year, we launched bouquet of digital products across deposits, loans, cards and investments, many of them being industry first like our cloud-native loan management system built in-house and the full end-to-end digital forex card proposition. These products have started making contribution to the Bank’ sourcing with close to 1.35 lakh digital SA accounts opened leveraging the video KYC while 71% of fixed deposits and over 40% of Mutual Funds were sourced digitally in fiscal 2020-21. The Bank’s initiatives on the digital front have been widely recognised and the Bank was awarded the 'Best Digital Bank' by Asiamoney and Financial Express during the year.

We have adopted OPEN approach towards reimagining customer journeys which involves rebuilding entire journey with ‘zero’ operations orientation using ‘proprietary’ in-house capabilities and delivering solutions that are ‘Ecosystems’ capable and metrics oriented.

The Bank has been a pioneer in data analytics in Indian banking industry and has built a dedicated team of over 400 members consisting of data scientists, data engineers and business analysts with techno functional skillsets. We have been leveraging our strong data analytics capabilities across the business functions for not only improving cross-sell, customer experience, risk management and collections but also in fraud detection, operational optimisation and budgeting. Big Data Lake is now an integral part of our data analytics landscape and we have made significant progress towards further enhancing our Big Data Tech Stack with ability to analyse and serve on Cloud. During the fiscal, we also sourced 72% of credit cards and 57% of personal loans digitally backed by our big data led analytics and proprietary machine learning models.

In the corporate segment, our focus has been to build granularity and grow the book profitably, emphasising on segments that offer high growth opportunities and better RAROC. During the year, our focused segments like Mid-Corporate and MNC delivered 31% and 49% y-o-y growth. Our CBG which is one of the most profitable segments in Wholesale Bank delivered strong performance with 13% y-o-y growth in advances.

We continued our focus on deepening relationships with better rated corporates with an aim of not just lending balance sheet to these clients but also growing our wallet share of non-credit business like trade, forex and cash management. We have made significant progress towards becoming the transaction bank of choice for corporates with the share of non-credit granular fees in overall corporate and commercial banking fee mix increasing to 57% in fiscal 2020-21 from 52% in fiscal 2019-20.

A key area of distinctiveness is our ability to deliver 'One Axis' to our customer. We are currently one of a kind full-service Wholesale Bank that currently offers varied solutions across all financial services. From, traditional banking products, debt capital markets, investment banking to NBFC and Retail banking products like Burgundy wealth management, salary and trust services, forex and commercial credit cards.

During the year, our various business segments within Retail and Wholesale Bank collaborated with our subsidiaries to provide solutions to our clients, thereby deepening the customer relationships further. We have over the last two years strengthened our capabilities across our subsidiaries by strengthening the senior management teams, developing innovative product offerings backed by improvement in processes and widening our distribution reach through physical and digital channels.

The rigour and rhythm and concerted efforts made by teams collectively as One Axis have started reflecting in the superlative financial performance of our domestic subsidiaries that together delivered total profits of `833 crores, up 75% y-o-y. Axis AMC continued to grow faster than the industry to deliver 2x growth in profits while our retail brokerage subsidiary delivered 10x growth in profits. Axis Capital continued to maintain its dominance in equity capital markets with 52 deals. Axis Finance too delivered profitable growth with ROE of 14.60% and healthy capital adequacy ratio of over 20%. Even as our investments in operating subsidiaries over last two years have remained flat at `1,815 crores, these operating subsidiaries delivered 17% CAGR growth in net worth.

However, our focus still continues to be on further scaling up the subsidiaries so that they gain higher market share in their respective businesses. During the year, Axis Securities acquired the customer trading accounts of Karvy Stock Broking to become the third largest player with total customer base of 3.6 million. We have always believed in increasing participation in the fast-growing life insurance space and recently completed the stake acquisition in Max Life Insurance to become a co-promoter in India’s fourth largest insurance company.

GPS Progress

Through these unprecedented times, we have remain committed towards our ambition of delivering on our medium-term strategic goals under the vectors of Growth, Profitability, Sustainability. During the year, we continued to invest in several initiatives and strategic projects in line with our GPS strategy.

Growth

- Led by our focus on building granularity across businesses and strong focus on execution, we have delivered strong growth across our focused segments
- Our CASA deposits grew 20% with the share of CASA deposits increasing 372 bps to 45% in overall deposits. Retail SA grew 19% while the CA growth stood at 26%
- Our Corporate loan book including TLTRO grew 16% with significantly higher growth across our focused segments like Mid-Corporates and MNC
- Our CBG loan growth stood at 13% y-o-y
- Retail disbursements touched all-time highs during the fourth quarter

Profitability

- Net profit grew by 305% y-o-y
- Operating profits grew by 10% with NIMs improving to 3.53%
- Our cost to assets has moderated during the year to 1.96% from 2.09% and we continued to focus on building cost consciousness across the Bank
- We continued to build granularity in our fee income with segments like third-party products distribution and transaction banking growing by 30% and 9%, respectively
- Our domestic subsidiaries delivered 75% y-o-y growth in net profits

Sustainability

- In the last two years, we have taken concrete actions towards strengthening the core around policies, processes, controls, and operations
- We have progressively strengthened our risk management framework and our credit underwriting processes
- We have made significant progress on legacy issues with the proportion of BB and below book having steadily declined over the years
- We have been proactive and prudent, and have built significant additional provisioning buffers of over `12,000 crores with standard asset coverage ratio of 1.95%

As an organisation, we have always believed that our employees are our greatest asset and true brand ambassadors of our culture and core values. Our employees, especially our frontline team displayed unbridled enthusiasm, creativity, agility and ownership through this challenging year. I take great pride in the fact that we were one of the first banks to set in motion large-scale changes in our working model by introducing rostering across branches, 'work from home' across large offices and ensuring hygiene safety and security across the Bank. We also took the lead in introducing hybrid model of working and redefining conventional work and jobs beyond full time, on-site employment with the launch of GIG-A opportunities during the year. The new ways of working provided the much needed flexibility and added to our productivity.

We also took the lead in introducing hybrid model of working and redefining conventional work and jobs beyond full time, on-site employment with the launch of GIG-A opportunities during the year. The new ways of working provided the much needed flexibility and added to our productivity.

At Axis, we continued to invest in employee learning and their growth across levels, businesses, functions and geographies. We also launched several certification and talent development programmes for our middle management team towards building their leadership capabilities so that they can shoulder the mantle of spearheading our GPS objectives to the next level of achievement and success.

The community continues to be a critical stakeholder for us. During the year, the Bank committed significant funds towards curbing the spread of COVID-19 pandemic. Axis Bank Foundation played its role by providing relief supplies and facilitating higher standards of hygiene and medical infrastructure in deep rural areas. The Foundation also continued its initiatives towards positively affecting the rural livelihoods by scaling up financial inclusion and skill development programmes to over 0.9 million households as part of its mission to reach 2 million households by 2025.

During the year, we made a conscious and concerted effort to scale up our Environmental, Social and Governance (ESG)-aligned capabilities and performance by integrating ESG topics into agendas of pertinent Board Committees. The Bank has established an ESG Steering Committee comprising Heads of key departments who shall act as ESG champions within and outside the Bank and help drive key mandates across the Bank. I am happy to share that the Bank improved its ratings performance across key external ESG assessment platforms like S&P Dow Jones, MSCI and CDP during the year, even as it continued to feature in the prestigious FTSE4Good Emerging Index for the fourth consecutive year in 2020.

Even as we continue to witness the impact of second wave of COVID, I sincerely hope that the acceleration in vaccination drives and continued fiscal and monetary measures by government and the regulator would help the economy to recover from this pandemic by H2 of fiscal 2021-22. We are planning to use this disruption in business to further strengthen our core. We believe that our building blocks are firmly in place with granularity now built across businesses, improving operational performance, strong capital and balance sheet position to counter any unforeseen risks arising out of COVID wave 2. The mediumterm growth drivers remain firmly in place on the back of several initiatives taken by the government to boost manufacturing and small industries, and recent shift in global manufacturing and supply chain dynamics towards India. In such an environment, large banks with healthy operational performance, strong balance sheet and capital position, superior risk management and operational capabilities would continue to grow faster than the overall sector.

reiterate my gratitude to all my colleagues for their relentless and selfless efforts in keeping the promise of ‘Dil Se Open’ to our stakeholders despite all odds. I thank our external stakeholders for their continued willingness to partner with Axis Bank in its long-term growth journey. We as One Axis will continue to challenge ourselves and strive towards building a distinctive Axis Bank.

Warm Regards,

Amitabh Chaudhry

MD & CEO