"The collective efforts of our employees and partners have set Axis Bank on a journey of distinctiveness to become an open, customer centric and future ready Bank that will offer its customers ‘a world of new possibilities’."
MD & CEO
The fiscal 2022 was a significant milestone in the journey of Axis Bank. While delivering on our ‘Dil Se Open’ promise to our stakeholders, our 85,500+ team members displayed exemplary commitment through yet another challenging year to deliver essential services as Bankers to the economy at large. I take pride in the way the Axis family adapted to the new normal, raised the bar on innovation and remained steadfast towards our goals.
We delivered on our key strategic goals through our relentless execution, backed by a positive culture change and delivery on our ambitious transformation projects, across businesses and functions. The collective efforts of our employees and partners have set Axis Bank on a journey of distinctiveness to become an open, customer centric and future ready Bank that will offer its customers ‘a world of new possibilities’.
The strong progress we have made in execution of our GPS strategy is highlighted through three discernible outcomes we have achieved during the year:
Lifted the growth trajectory and improved operating metrics led by a performance driven culture
Since we started on our GPS journey in March 2019, we have looked at the disruption brought about by the pandemic, or adverse macro-economic variables in the last two financial years, as an opportunity to redraw the baseline in multiple segments. We accelerated the growth momentum across various businesses of the Bank, accomplished several all-time highs, gained market share in our focus segments and improved the key operating metrics.
Our operating performance was robust with 98% y-o-y growth in net profit on back of 13% growth in net interest income and 22% growth in fee income despite our prudent accounting policies.
We have improved the trajectory of our return ratios, delivering consolidated annualised ROE of 13.74% in fiscal 2022 as against 8.28% in fiscal 2021. Our strong progress towards our GPS aspiration is reflected in our fourth quarter performance where we delivered consolidated annualised ROE of 16.67%. As part of our ‘One Axis’ strategy, our subsidiaries continued to deliver industry leading performance, delivering net profit growth of 44% y-o-y, and contributing 80 bps to Bank’s consolidated annualised ROE for the fourth quarter.
"We accelerated the growth momentum across various businesses of the Bank, accomplished several all-time highs, gained market share in our focus segments and improved the key operating metrics.
During the fiscal, we witnessed strong growth in deposits and advances led by our focus on building granularity across businesses. Our granular CASA deposits grew 21% y-o-y on cumulative daily average balance (CDAB) basis. On advances, we continued to grow faster than the industry with overall advances growing at 15% y-o-y while our focus segments comprising Mid-Corporate, SME, Small Business Banking and Rural, grew at a higher rate of 34% y-o-y.
We delivered several all-time yearly highs as we added 8.6 million new liability relationships, achieved record retail loan disbursements and issued 2.67 million credit cards. In our merchant acquiring business we improved our market positioning to 2nd in terms of terminal installations and also improved our throughput market share by over 670 bps to 20.3%. Our wealth management business ‘Burgundy’ continues to be among the largest in India with combined assets under management of `2.6 trillion and over 1.9 lakh affluent and ultra HNI clients. On the wholesale banking side, we saw highest ever contribution from new business underwritten in the Commercial Banking segment with 53% y-o-y growth. In the Wholesale Banking products segment, we delivered several industry firsts led by our focus on innovation.
Our winning mindset and ability to stand out in the market led by positive culture is also reflected in multiple external recognitions that the Bank received for its performance. At the start of the year, the Bank was recognised as # 1 on the Greenwich Quality Index as well as on Service Excellence for both Large Corporate banking and Middle Market banking. We were also awarded IFR Asia’s Asian Bank of The Year and India Bond House Award, for our breadth of coverage and depth of expertise in the Asian investment banking space. On the technology front, we were recognised by International Data Corporation (IDC) as “Asia’s Best in Infrastructure Modernisation Program” at the 2022 Financial Insights Innovation Awards. I am pleased to share that on the sustainability front, we won the ‘Leadership in Social Impact’ and the ‘Leadership in Transparency’ awards at the ESG India Leadership Award 2021. In fiscal 2022, we were also certified & recognised as one of the Top 5 BFSI employers in India by ‘Great Place to Work’ and received KPMG’s Best Bank- Talent and Workforce award.
i. Strong momentum in Retail Bank across all businesses
The Bank has over the last decade built a strong Retail franchise aided by our 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 building a quality and granular liability franchise led by premiumisation and deepening strategy continued to progress well. The balances from new retail SA customers acquired increased over 60% y-o-y. We also deepened existing to Bank (ETB) relationships with 37% y-o-y growth in balances for Burgundy and Burgundy Private SA customers. In our wealth management business, we scaled up our ‘Burgundy Private’ proposition strongly with over 2x growth in families and 74% y-o-y growth in AUM, leveraging our ‘One Axis’ capabilities across Axis Group.
During the year, our retail advances book grew 21% led by strong 49% growth in disbursements that touched new all-time yearly highs aided by several large transformation and technology initiatives. We continued to strengthen our market share in cards and payments businesses as we focused on scaling up the segment aggressively with substantially lower risks through our innovative product propositions and partnerships led Known to Bank (KTB) strategy.
In the cards segment, we witnessed strong growth momentum across key metrics with incremental market share of 16% in card issuances for the year, 58% y-o-y growth in card spends and 19% y-o-y growth in advances. During the year, 28% of overall card issuances were through our partnerships with Flipkart, Google Pay, Freecharge and others, up from 21% in fiscal 2021. 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.
During the year, we announced the proposed acquisition of Citibank’s consumer businesses in India that provides us an opportunity to further accelerate retail business growth while strengthening our positioning across our key business segments like credit cards, wealth management, salary deposits and focused retail lending businesses.
"We continued to strengthen our market share in cards and payments businesses as we focused on scaling up the segment aggressively with substantially lower risks through our innovative product propositions and partnerships led Known to Bank (KTB) strategy.
ii. Strong progress made in our endeavour to build a profitable and sustainable Corporate Bank
On the corporate side, our strategic focus has been to deepen the relationships and provide holistic banking solutions to large corporates while delivering higher growth in our chosen business segments.
Today, we are amongst the best and most comprehensive Wholesale Banking franchise with our ability to deliver “One Axis” to customers being our key distinctiveness attribute.
During the year, our focussed segments like Mid-Corporate, Commercial Banking (CBG) and MNC delivered 45%, 26% and 49% y-o-y growth. We also made significant progress towards becoming “the transaction bank of choice” for corporates. During the year, we won several complex cash management mandates, undertook several industry firsts like blockchain enabled domestic trade transaction and arranged SOFR (Secured Overnight Financing Rate) linked trade financing deal thereby gaining market share in trade and forex business. Our market share in foreign Letter of Credit issuances increased by 140 bps y-o-y to 10.6%, and we continued to have strong positioning in GST and RTGS payments with market share of over 8% each.
iii. Significant value creation happening in our key group entities
We have over the last few 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. The success of our ‘One Axis’ strategy is reflected in the superlative financial performance of our domestic subsidiaries that together delivered total profits of `1,195 crores, up 44% y-o-y.
Axis AMC continued to gain incremental market share with 45% y-o-y growth in equity average AUM and 47% y-o-y growth in net profit, while our Axis Securities delivered strong performance with 56% y-o-y growth in revenues and 40% y-o-y growth in net profit. Axis Capital continued to maintain its dominance in equity capital markets. Axis Finance too delivered 72% y-o-y growth in net profit with ROE of 20.3%, healthy capital adequacy ratio of over 20% and superior asset quality. Freecharge remains among the major fintechs in India with its products Buy Now Pay Later and Merchant Cash Advance gaining strong traction through the year. Max Life Insurance, India’s fourth largest insurance company where we are a co-promoter too delivered strong performance with expansion in margins and 40% y-o-y growth in net profit. Our focus continues to be on further scaling up the subsidiaries so that they gain higher market share in their respective businesses.
The oversight on Bank’s subsidiaries remains an essential element of our “One Axis” strategy and we have a well-established integrated Subsidiaries Governance Framework to ensure alignment of corporate governance principles across group entities. The framework is supplemented by a set of Governance policies and a monitoring mechanism under the Subsidiary Management Committee approved framework. As a responsible institution, Axis Bank has zero-tolerance towards any unethical practice and remains committed to striving for best in class corporate governance standards across its operations including subsidiaries.
During the year, the management of Axis AMC took stringent action in respect of individuals where the AMC had reason to believe that there may have been a violation of securities laws. While the review process is still ongoing, pursuant to the findings, certain actions have been taken, and various enhancements are being implemented based on findings till date. Axis AMC continues to maintain governance standards including compliance with all legal and regulatory requirements and has a zero-tolerance policy towards any instance of non- compliance. The management of Axis AMC has informed SEBI of the investigation and action taken and is co-operating with SEBI on the same.
Strengthened the balance sheet and core significantly
i. Strong balance sheet and healthy capital ensure that we enter this cycle from a position of strength
We have taken concrete actions towards strengthening our policies, processes and controls in the last three years. Our balance sheet remains resilient as we continued our prudent stance towards provisioning and policies with limited ECLGS and restructuring during the year. We increased our provision coverage ratio from 72% to 75% while maintaining significant additional non NPA provisioning buffers of over `12,400 crores, that translated to standard asset coverage ratio of 1.77%, among the highest in the industry.
The Bank’s asset quality is among the best in class as the net NPA during the year further declined from 1.05% to 0.73% and the fund-based BB & below book too declined 34 bps y-o-y to 0.75% of customer assets. The Bank has also maintained amongst the lowest restructured portfolios of 0.52%, which is well provided for. The Bank’s strong balance sheet and healthy capital with CET 1 ratio of 15.28% ensures that we enter this cycle from a position of strength.
ii. Building next generation technology architecture
Over the last few years, we have made significant investments in building digital and tech capabilities, invested in talent and made key transformational bets for future across our businesses
Our IT team strength has grown by 75% with over 2x increase in technology spends in the last 2 years with focus on modernising the core, scaling up the Cloud portfolio for supporting the real time business models and building resilience across our operations. We adopted a multi cloud-first strategy for our digital banking platform and have created three landing zones (AWS, Azure and GCP) with over 55 initiatives on cloud, which is one of the highest in this area within the Indian financial service sector. Our BitSight rating, a key risk indicator of overall cyber security, stood at 780 out of 900, highlighting our strong focus on risk and governance.
Our efforts to modernise the core and future proof our technology architecture received multiple external recognitions during the year. During the year, we became the first member of the Banking Industry Architecture Network (BIAN) in India and also won the IBS Intelligence Global FinTech Innovation Awards 2021 for the “Best CRM System Implementation”.
iii. Organisation wide transformation projects to accelerate our GPS journey
The multi-year transformation program that we started last year towards accelerating our GPS journey has been progressing well with 19 large transformational projects being managed directly by our management committee members. The execution of these projects have largely remained on track with promising outcomes in the form of improved productivity, reduction in turnaround times and better customer experience. The strong rhythm and rigor that we have built across our distribution engine – led by transformation projects like Triumph, Aarambh, Unnati, Zenith and Sankalp - are reflecting in improved business performance in retail liabilities, retail assets, cards and commercial banking segments. We have also made significant progress in our project ‘Neo’ towards building a world class Digital Corporate Bank. The first journeys in beta phase have gone live during the fourth quarter of this year and we remain committed to build banking of the future framework for corporates.
The multi-year transformation program that we started last year towards accelerating our GPS journey has been progressing well with 19 large transformational projects being managed directly by our management committee members.
Building a future ready organisation
During the year, we created a growth focused ‘Bharat Bank’ unit in order to drive higher business growth in Rural and Semi-Urban markets through asset led liability strategy and grow the PSL book meaningfully.
i. Digital continues to be an area of relentless focus for us
As part of our strategy to build a future ready organisation, we have made strong progress towards our Digital agenda of reimagining end-end journeys and transforming the core and becoming a partner of choice for ecosystems. We now have over 1,500 people dedicated to digital agenda with 350+ member full service inhouse team and 1,000+ automated processes enabled through Intelligent Automation. We are leveraging our in- house product, design and engineering teams to create proprietary digital products, impact of which is now visible across the business segments. The Bank now has over 80 partnerships across ecosystem and has over 300 APIs hosted on API Developer Portal. We were also the first bank to go live on the Account Aggregator framework and have launched several use cases in loan acquisition of personal loans, auto loans, credit cards etc.
We have been a pioneer in Data Analytics in Indian banking industry with a strong dedicated team of over 450 members consisting of data scientists, data engineers and business analysts with techno functional skillsets. We are working to build data stack 3.0, which is a cloud based, real time, flexible architecture covering structured and unstructured data for next level of analytics. We have also created service data lake with a rich nudge library towards making customer journeys more impactful and personalised. Further through our initiative on universal underwriting, we are building alternate data platforms and capabilities to underwrite a significant section of the lendable population in India.
ii. Bank-wide programs to build distinctiveness
During the year, we identified two areas of distinctiveness for the Bank - ‘Bharat Banking’ and ‘Customer Obsession’ and also strengthened our leadership team and re- oriented the structure to deliver on these imperatives.
We have created a growth focused ‘Bharat Bank’ unit in order to drive higher business growth in Rural and Semi-Urban markets through asset led liability strategy and grow the Priority Sector Lending (PSL) book meaningfully. Our focus has been on building an ecosystem for Bharat by introducing specific Bharat centric products and expanding our reach leveraging strong physical distribution and digital channels. We are also focused on developing strategic partnerships with agri-corporates and OEMs to scale up rural enterprises segment and capture entire rural value chain. We also intend to leverage our strong data analytics capability to underwrite and cross-sell products and redesign end-to-end customer journeys to deliver distinctiveness. As a result of our focused approach, we achieved highest ever monthly disbursement in March 2022 across all the major product segments and delivered 29% y-o-y growth in rural loan book.
We also embarked upon a distinctiveness program ‘Sparsh’ to drive customer obsession in the Bank. This journey is aimed to build customer experience as a true differentiator for the Bank with our core credo being to "delight our customers and fulfill their dreams, through smart banking everyday." As part of our ‘Branch of the Future’ initiative under our broader customer experience transformation programme, we have also been working on re-engineering key service requests to release frontline capacity from servicing, and towards enabling relationship building and sales.
iii. ESG continues to remain a Bank- wide agenda
We have always recognised our employees as our greatest asset and they remain key to achieving our medium term GPS aspirations. We have been working towards creating an organisation that will lead the industry, not just in business performance but as a distinctive workplace. We continue to be at the forefront of modern workplace practices with over 3,600 employees working from anywhere under GIG-A-Anywhere and over 12,000 employees in our large offices being part of the hybrid working model. We continued to invest in our people with learning hours across the organisation increasing over 13 times and created avenues for building leadership skills for our young leaders through our talent development programs ‘Astros’ and ‘Ahead’. We also made commitments under the initiatives such as ‘#Comeasyouare’ - where we look at gender and sexuality beyond the binary template, and ‘#HouseWorkIsWork’ - where we encourage women with homemaking skills to apply the same at work, towards building the foundation for a more inclusive Axis.
The community continues to be a critical stakeholder for us. For the second consecutive year, the Bank played its role towards abating the hardships of the communities most affected due to Covid and supported vaccination drives for the economically weaker sections in urban areas in partnership with pertinent government and healthcare entities. The Axis Bank Foundation made strong strides towards achieving the ‘Mission 2 Million’ commitment by 2025 under its Sustainable Livelihoods program as it crossed the significant milestone of supporting 1 million households as part of its mission to reach 2 million households by the year 2025.
We have significantly scaled up the integration of ESG into the Bank’s overall business strategy and agenda. During the year, we became the first Indian Bank to constitute an ESG Committee of the Board and raised USD $600 million in India’s first ESG compliant Sustainable AT1 Bond in the overseas market. The steps we have taken in diversity, equity and inclusion are widely recognised as pioneering in India. The Bank also improved its ESG ratings further across assessment platforms like S&P Dow Jones, MSCI and CDP, and featured in the prestigious FTSE4Good Emerging Index for the fifth consecutive year in 2021.
Disciplined execution of GPS strategy and various transformation projects place us in a strong position
While the rising inflation, tightening liquidity and geo-political developments pose a near term risk to economic growth, the opportunity in financial services space is immense. The long-term growth drivers for Indian economy remain firmly in place on 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. Over the last few years, we have witnessed rapid fundamental shifts in banking and financial services industry led by three big trends ‘consumerisation’, ‘digital disruption’ and ‘increased regulatory oversight’. There has been intense competition between the incumbent banks and new age fin-tech companies to win the hearts and minds of customers. In such an environment, the large banks with healthy operational performance, strong balance sheet and capital position, superior technological and operational capabilities and robust risk management practices would continue to grow faster than the overall sector.
The significant investments which we have made in transformation projects and upfronting technology spends towards strengthening our core, building granularity across businesses and our One Axis strategy have ensured that we are well positioned to grow and leverage the opportunities as they open up. Further, the steps we have taken in building a Bank for Bharat, in raising the bar on customer obsession with our project ‘Sparsh’, and the contracted acquisition of Citi’s India consumer business continue to push our agenda in the right direction.
The transition and integration process related to Citi’s consumer businesses has been progressing well and remains on track. The Integration Management Office with a steering committee is in place with nominees from both sides. The work has already commenced on key work streams around people, technology, business functions, operations etc. towards optimising the transition process. Basis the transaction closing by fourth quarter of fiscal 2023, we expect to fully integrate the acquired businesses in 18 months thereafter.
I thank our external stakeholders for their continued support and willingness to partner with Axis Bank in its long- term growth journey. As we look forward to fiscal 2023, the growth momentum is tremendous across every segment within the Axis group. Our aspirations are bigger, and we remain optimistic and confident to continue delivering steady upward movement on business and financial metrics. We as a Bank reiterate our commitment of being ‘Open’ to our customers’ needs, concerns and aspirations.
MD & CEO