Business Segment

Message from Management

"With customer centricity and distinctive customer experience at the core of our Dil Se Open philosophy, our Retail franchise offered a world of possibilities to our consumers while growing faster than the industry, despite the challenging macro environment."

Ravi Narayanan

Group Executive - Retail Liabilities and Branch Banking

"While we pivoted the growth in Retail book towards our identified focused segments like small business banking and rural, we also gradually accelerated growth across personal loans and credit cards with the economic impact of Covid waning towards the latter half of the year."

Sumit Bali

Group Executive - Retail Lending and Payments

Dear Shareholders,

The fiscal year 2022 was yet another mixed year for the Retail banking sector with two contrasting halves. The retail sector credit growth recovered strongly in the second half of the year led by improvement in consumer sentiments towards discretionary spending. While the mortgage loan growth for the sector witnessed slight moderation, the non-mortgage sector loan growth improved considerably led by credit cards, consumer durables and other personal loans.

With customer centricity and distinctive customer experience at the core of our Dil Se Open philosophy, our Retail franchise offered a world of possibilities to our consumers while growing faster than the industry, despite the challenging macro environment. We delivered several all-time yearly highs as we added 8.6 million new liability relationships, achieved record retail loan disbursements, issued 2.67 million credit cards and gained incremental market share of 30% in merchant acquiring business. This was led by focused execution of our GPS strategy and several transformation projects that are currently underway.

Our core strategy in Retail has been to drive sustainable RAROC growth led by our diversified business segments, strong customer relationships and wide distribution network. Driven by our relentless focus on strengthening and building granularity across the businesses, we witnessed strong momentum across all our key businesses during the year. Our CASA deposits grew 16% y-o-y, Retail loan book (constituting 57% of overall Bank advances) grew 21% y-o-y and Retail fees grew 25%, contributing 64% to the overall Bank fee income.

Building a quality and granular retail liabilities franchise

On the retail liabilities front, our strategy centred around granularisation, premiumisation and deepening of the deposit base, has made good progress. We have, over the last three years, focused on district level product segment strategy, backed by customer insights driven analytical models to improve customer acquisitions. During the year, we added record new liability relationships with over 4.3 million new SA relationships, 53% higher than the previous year. Our focus on offering ‘right fit’ solutions, new product propositions with several value-added features and strengthening the customer – relationship manager engagement helped deepen these relationships. Balances from new retail SA customers acquired increased over 60% y-o-y.

Premiumisation of the liabilities franchise continues to be an important imperative for the Bank. Our wealth management business ‘Burgundy’ is among the largest in India with combined assets under management of `2.6 trillion and over 1.9 lakh affluent and ultra HNI clients. During the year, we continued to leverage our open architecture platform and ‘One Axis’ capabilities across Axis Group to engage and serve the be-spoke requirements of Burgundy customers. Our persistent customer outreach and innovative wealth management & banking solutions resulted in 37% YoY growth in balances of Burgundy and Burgundy Private customers with the Bank. Correspondingly, the share of premium segments in the overall retail savings balances for Existing to Bank (ETB) customers increased by 90 bps to 44%.

We continued to work towards leveraging our relationships with leading corporates to gain a higher share in the salary segment. Digital onboarding through Video KYC was launched in June 2021 for Corporate Salary accounts to provide a seamless end-toend experience for our customers. This helped add a record 1.5 million new salary accounts in fiscal 2022, with an all-time high balance contribution from them, a reflection of growth in both quality and quantity.

During the year, we also deepened our relationships across various government businesses and signed MOUs with the Indian Army, Indian Navy, Police and Forest departments among others. This resulted in government SA deposits growing 40% y-o-y. As part of our various planned interventions to increase the share of LCR accretive retail term deposits also launched an industryfirst full digital KYC based fixed deposits which allows insta account opening for New to Bank (NTB) customers on our platforms and those of our partners.

Our third-party products distribution business delivered strong growth led by our focus on building a digital ecosystem around partnerships and offering distinct product propositions in order to meet the customers’ financial investments and protection needs. The fee from third party products, including the retail forex remittances business, continues to remain an important driver of our total retail fees. Our thirdparty distribution fee grew strongly by 29% y-o-y with investment and insurance related fees up 48% and 22% y-o-y respectively.

Delivering strong growth across retail product segments aided by transformation projects

On the retail lending side, our strategic focus has been to deliver profitable growth while continuing to diversify the book. Our disbursements across the product segments continued to improve sequentially and touched new highs during the year led by improved rigour, rhythm and operational efficiencies.

In fiscal 2022, while we pivoted the growth in Retail book towards our identified focused segments like small business banking and rural, we also gradually accelerated growth across personal loans and credit cards with the economic impact of covid waning towards the latter half of year.

The small business banking segment witnessed a 60% y-o-y growth, a result of the ramp up in acquisition of new clients and a focus on providing a full suite of solutions from the Bank to our existing clients. The growth across our unsecured loan portfolio consisting of personal loans and credit cards too improved by 15% and 19%, respectively on a y-o-y basis as we leveraged our strong data analytics capabilities and strengthened credit underwriting models to scale up distribution and partnership channels.

Bharat Banking initiative to create distinctiveness and drive higher growth in RUSU markets

During the year, we created a separate ‘Bharat Bank’ vertical to offer distinctiveness and open the world of possibilities for our customers in the rural and semi-urban (RUSU) markets. The initiative is an amalgamation of products and geography, providing all the retail assets and liability products of the Bank across 2,065 ‘Bharat’ branches while offering certain core rural lending products like farm finance, farm equipment finance, gold loan, microfinance products, etc across the country

Our strategic focus here is to grow the book profitably by introducing specific Bharat centric product suite across assets and liabilities, improving operational efficiency to reduce cost, expanding distribution reach, and containing risk by leveraging technology such as Artificial Intelligence (AI) and Machine Learning (ML) along with rigorous portfolio monitoring.

We have built customised crop-based programs in farmer finance segment, launched new products with differential pricing in gold loans, and introduced tailor made product and services based on “customer first” principal in our Bharat Enterprises businesses.

Digital has been and continues to be the key theme to build distinctiveness in the RUSU markets. We are revamping end-to-end customer journey for high growth products that will significantly lower TAT, building platforms that enable quick scaleup & provide omnichannel experience to the customer, brining digital sales enablement tools to enhance productivity, and digitising the processes to improve governance.

We have enhanced our distribution network significantly in rural regions with the help of 40,400+ Village Level Entrepreneurs (VLEs) of Common Service Centers (CSC) outlets that would act as extended arms for our 2,065 Bharat branches as compared to 13,654 CSC outlets across 1,577 branches last year. We are also working towards re-imagining the branches and strengthening the brand in RUSU markets by bringing more localised nuances into the design, moving away from a transaction-led to an experienceled model.

As part of our Bank wide strategy, we consider financial inclusion as our integral focus towards contributing to society, by enabling financial literacy and providing appropriate cost efficient formal financial solutions to the lower income segment, via digital modes. The loans to small and marginal farmers and microfinance businesses targeted at women borrowers from low-income households in this segment also contributes significantly to the Bank’s PSL targets. We have launched new products tailored to retail MFI customers, streamlined disbursal and renewal processes and improved collection efficiencies leveraging our strong digital capabilities and analytical models.

We are also focused on developing strategic partnerships with agricorporates, OEMs, agri-techs and rural NBFCs to scale up the Bharat Enterprises segment and capture the entire rural value chain. The strategy is to embed banking in the digital ecosystem of the clients, pursue co-lending opportunities for PSL and leverage the tech stacks and alternate data to underwrite customers better. Our Bharat Enterprises business that caters to the rural MSME and wholesale MFI has delivered strong growth and we see significant growth potential here.

As a result of our focused product segment drives and segment wide initiatives, we achieved the highest ever monthly disbursement in March 2022 across all the major product segments and delivered a 14% y-o-y growth in deposits from 2,065 ‘Bharat’ branches. Our overall rural loan book which is a well-diversified portfolio across geographies and product segments grew 29% y-o-y.

Remain focused on improving productivity and customer experience across the channels

Over the past 2-3 years, we have improved the productivity across retail businesses while strengthening the branch and Virtual Relationship Manager (VRM) customer contact rhythm, aided by strong supervisor led review cadence and consistent training and certification programs.

In fiscal 2022, we continued with our calibrated branch expansion strategy with emphasis on customer centricity and better engagement to drive higher cross-sell opportunities from Bank’s existing customer base. As part of our ‘Branch of the Future’ initiative, we have now digitised over 90% of customer service requests in branches, simplified cash management through iBAS machines and automated daily operational activities like registers and biometric based locker operations. Through these planned interventions, we have substantially improved customer engagement time for branch relationship officers and tellers by 2x and 7x respectively. We also continue to leverage ‘One Axis’ capabilities through our dedicated Asset Desks and Wealth Desks to provide the entire gamut of product and services to our customers.

Our Axis Virtual Centre (AVC) channel is now stronger with a team of over 5,000 executives across six centres. Their interactions, backed by technology and a solution centric approach, with close to 6 million customers every month continues to play an important role in acquiring, engaging and managing customer relationships.

Digital continues to be the cornerstone of our growth strategy and we continue to build capabilities and invest in transformational projects. Our digital product suite saw good growth during the year as we introduced multiple simplified and end-to-end journeys for products including Digital SA and CA, fixed deposits, mutual funds, insurance, PPF, NPS, Digital Gold, etc. that witnessed good adoption by customers. These products have started contributing to the Bank with over 21% of non-salary SA and 29% of individual CA accounts opened digitally leveraging the video KYC, 68% of fixed deposits and 46% of new MF SIPs sourced digitally in fiscal 2022. During the fiscal, we sourced 78% of credit cards and 46% of personal loans through digital channels backed by our proprietary machine learning models.

Our commitment and OPEN-ness to serve our most important stakeholders continued to be well recognised by our customers and external agencies. The Bank was adjudged Best Retail Bank in India at the Retail Banker International Asia Trailblazer Awards 2021. The Bank was also recognised as ‘Most recommended Retail Bank in India’ and ‘Most helpful Bank during Covid-19 in India and 4th in Asia Pacific’ as per the Asian Banker’s Bank Quality Consumer Survey on Retail Banks for the year 2021.

Improved our market positioning in cards and payments aided by strong product propositions and strategic partnerships

During the year, we improved our market positioning in the cards and payments businesses led by strong growth momentum in card issuances, spends and advances. We issued 2.67 million credit cards in fiscal 2022, highest ever yearly issuances led by our revamped best in class product suite and our Known to Bank (KTB) partnership strategy. Our co-branded card ‘Flipkart Axis Bank Credit Card’ achieved yet another significant milestone of 2 million cards in force in February 2022, after having crossed the 1 million mark last fiscal, making it one of the fastest growing co-branded portfolios since its launch in July 2019. Our spends on Flipkart card continue to outperform industry in terms of activation and card usage with better risk outcomes. During the year, we also entered into a strategic partnership with Airtel that will help us to offer credit cards and various digital financial offerings to Airtel’s 340 million customers.

Our market leading alliances for customer engagement offers along with digital partnerships and our online shopping platform Grab Deals aided the card spends that grew 58% y-o-y. We launched a new digital card servicing platform that now offers virtual card management and service features related to upgrades, limit management, EMI conversion that aided our card advances growth.

During the year, we improved our position as the second-largest merchantacquiring bank in the country with an installed capacity of over 1 million terminals. We gained an incremental market share of 30% in fiscal 2022 led by our ‘One Axis’ approach towards empowering merchants with innovative offerings and integrated ecosystem solutions.

We also remain one of the largest players in prepaid forex card market. During the year, digital outward remittances through mobile app have grown almost 2x while the contribution of fully digital forex card issuance platform to overall retail forex business has increased to around 60%.

In the UPI space where we have more than 312 million customer VPAs (Virtual Private Addresses), we continue to have strong positioning with overall market share of 15% as Payer PSP and 19% on P2M acquiring side. Our investments towards strengthening the IT cloud infrastructure to exclusively handle high volume UPI transactions has resulted in the Bank achieving one of the lowest decline rates as a remitter bank in the industry. We also maintained our strong positioning in Mobile Banking where we are among the highest rated financial apps in the country, with monthly active users of 9 million and total non-Axis Bank customer base of 5.6 million.

We are well placed to accelerate growth momentum further led by our strong balance sheet and improved operational and technological capabilities

We, as a Bank, have continued to make process improvements through digitisation, automation and increased usage of scorecards to support better decisioning on credit underwriting. We have also taken significant steps to build prudence around risk management, provisioning and restructuring policies in the last three years. We have been conservative in our approach, recognising the stressed assets upfront rather than restructure them. At the same time, we have strengthened our collections infrastructure significantly, that has resulted in higher recoveries and upgradations in recent quarters. The asset quality in Retail has remained stable with low net slippages and decline in net NPA ratio by 28 bps y-o-y to 0.57%.

While the rising commodity prices and inflation pose a near term risk to consumer demand, we believe the trend of rising consumerism and urbanisation in India with better access to credit will continue to drive the retail business. Within the banking sector, over the last decade, there has been a large shift in market share in advances and deposits to large private banks and this trend is likely to continue given their strong operational and technological capabilities. We at Axis Bank are well placed to leverage these trends.

Our strong performance in fiscal 2022, gives us confidence that we are on track to achieve our strategic objectives. We remain confident that our strategy to diversify and build granularity across our retail businesses, along with our strong balance sheet and robust risk management practices will help us deliver sustainable and profitable growth. Further, our investments in transformation and technology initiatives and the recent acquisition of Citibank’s consumer franchise would help us accelerate retail business growth and strengthen our market positioning further across our key businesses.

Warm Regards,

Ravi Narayanan

Group Executive - Retail Liabilities and Branch Banking

Sumit Bali

Group Executive - Retail Lending and Payments