With our ‘dil se open’ approach to serving the needs and aspirations of our customers, we at Axis Bank believe that we will win when our customers and stakeholders win.
‘Open’ has been the driving force behind our GPS journey. We have now created a strong platform with multiplicative forces through our One Axis approach along with the unification of digital platforms, partnerships and transformational projects to win across businesses.
The fiscal 2023 has been a historic year in our GPS journey as we made remarkable strides towards our ambition of attaining the leadership position in India's banking space. We delivered a solid performance as we lifted the growth momentum with meaningful upward shift in profitability, led by market share gains and several other accomplishments through the year.
We witnessed strong growth across our focus segments, completed successful acquisition of Citibank India Consumer Business and retained our leadership position in specific businesses like payments, wealth management and Digital. Our steady progress towards delivering distinctiveness in our chosen areas namely Customer Obsession, Bharat Banking, Digital Bank and ‘One Axis’ has further provided us agility, innovation and synergies to win across business segments.
We are now consistently surpassing our GPS aspirational target of 18% ROE and have fundamentally improved net interest margins to deliver earnings that are more predictable and consistent. The strength of our franchise is further visible through our self-sustaining capital structure.
Our consolidated ROE (excluding exceptional items) for the fiscal 2023 was 18.84% led by all round outperformance across NIMs, fees, costs and asset quality metrics. We delivered growth of 68% in Profit After Tax (excluding exceptional items) on the back of 30% growth in net interest income and 25% growth in fee income. Our NIMs for the entire year improved by 55 bps y-o-y to 4.02%, while the credit costs declined by 32 bps y-o-y to 0.40%. Our organic businesses net accreted 69 bps of CET 1 (excluding exceptional items) in fiscal 2023 as compared to net consumption of 176 bps in previous five years. These metrics provide us confidence to carry this momentum ahead as we continue to focus on the three core areas of execution:
We accelerated the growth momentum in fiscal 2023 led by continued executional excellence and transformation across various businesses of the Bank while setting new benchmarks in our focus areas to deliver improvement in key operating metrics.
During the fiscal, we witnessed strong growth in deposits and advances led by our focus on improving quality and granularity across businesses. Our granular CASA deposits grew 21% y-o-y. On advances, we continued to grow faster than the industry with domestic loan book growth of 23% y-o-y. Our focus segments comprising Mid Corporate, SME and Small Business Banking (SBB), grew at a much higher pace of 32% y-o-y and now constitute 20% of overall loan book.
The Retail franchise delivered strong growth led by improvement in the quality of our deposits and higher market share across our key businesses. We delivered several all-time yearly highs as we added 10.8 million new liability relationships and achieved record loan disbursements across the retail and rural segments.
Our focus on building a quality and granular liability franchise continued to progress well with 870 bps y-o-y increase in the share of premium segment in Retail SA deposits portfolio and 550 bps y-o-y reduction in the overall deposits’ outflow rates. Our wealth management business ‘Burgundy’ continues to be among the largest in India with combined assets under management of H3.6 trillion and 30 of the top 100 richest Indians as our Burgundy Private clients.
Our well-diversified retail advances book grew 22% with higher growth in focus segments with SBB (50% y-o-y) and Rural (26% y-o-y), aided by several large transformation and technology initiatives. We also strengthened our market share in retail cards and payments businesses led by our innovative product propositions and partnerships led KTB (Known to Bank) strategy. We witnessed strong growth momentum across key metrics with all time high issuances of 4.2 million new credit cards, 63% y-o-y growth in card spends and 97% y-o-y growth in card advances.
By successfully completing the acquisition of Citibank's India Consumer Business, we have achieved a new landmark in the Indian banking industry. This provides us an opportunity to further accelerate our retail business growth while strengthening our positioning across key business segments.
Our positioning in the credit cards business has strengthened with our card advances market share improving by 450 bps to 16.3% led by the acquisition of a quality and complementary credit card franchise. Our liability franchise received a boost with over 100 bps improvement in CASA ratio and access to over 1,600 Suvidha corporate relationships.
In wealth management business, we gained highly affluent Wealth customer base that would further accelerate our growth ambitions.
The integration of Citibank India Consumer Business remains well on track with ~3,200 Citi employees now integrated into the Axis organisation structure. Early traction from the Citibank customer base has been quite positive. Our interactions with several high-value customers suggest their acknowledgment of the seamless transition, continuation of highest levels of service, access to Axis Bank’s extensive network of branches, and wide product portfolio under the One Axis umbrella. We have already started incremental onboarding of erstwhile ‘Suvidha’ salary accounts on Axis Bank platform for additional locations across the country where Citi was hitherto not present.
While the acquired Citi business being entirely retail runs at a higher cost, it comes with higher return ratios and is ROE accretive post integration. It does not impede our ability to deliver our aspirational ROE. We have identified 60+ synergy initiatives across the Bank as we look to drive revenue and cost benefits. We believe that this integration between two highly complementary institutions will enable us to create the gold standard in the retail space.
We have the best and most comprehensive Wholesale Banking franchise today. Our strategic focus in this segment has been to deliver relationship RAROC focused growth leveraging our ‘One Axis’ and Digital capabilities to provide holistic banking solutions to corporates. We stepped up growth across the coverage segments in fiscal 2023 with domestic corporate loan book up 24% y-o-y.
MSME segment continues to remain a key growth driver for the Bank. The combined loan portfolio of Mid Corporate and SME has doubled in the last three years, with 1,100 bps improvement in contribution to overall Wholesale book, thereby bringing higher granularity and aiding the PSL agenda of the Bank.
We continued to engage with our corporate client across their capital structure to be their ‘transaction Bank of choice’. We won significant mandates across the transaction banking segments led by our technology-led solutions that resulted in the transaction banking, forex and trade related fees contributing 78% to overall Wholesale Banking fees. We strengthened our leadership positioning across products with market share of ~31% in IMPS, 20% in Bharat Bill Payment ecosystem and 11% in foreign LC. We also improved our positioning in NEFT from 4th to 2nd rank with market share of 11% in fiscal 2023.
We have over the last four years scaled up the businesses across our subsidiaries significantly led by our ‘One Axis’ strategy. The domestic subsidiaries delivered yet another year of good performance with total profits of H1,304 crores and contributed 46 bps to the Bank’s consolidated ROE (excluding exceptional items) of 18.84%.
Axis Finance, our full-service customerfocused NBFC franchise delivered 30% y-o-y growth in net profit with ROE of 16.9%, healthy capital adequacy ratio of over 20% and superior asset quality. Axis AMC delivered PAT growth of 16% y-o-y, while our retail brokerage subsidiary delivered PAT of H203 crores in a volatile market environment. Axis Capital continued to maintain its dominance in equity capital markets. We continued to focus on offering holistic investment and financial solutions to our customers as we added retirement solutions with the launch of Axis Pension Fund during the year.
Freecharge remains among the major fintechs in India with strong growth in Payments and Merchant Business and scale up in lending products segment. Our digital invoice discounting platform ‘Invoicemart’ continues to set new benchmark as it facilitated financing of MSME invoices of more than H55,600 crores since its inception in 2017.
Max Life Insurance, India’s fourth
largest insurance company where we
are a co-promoter, also delivered strong
performance with expansion in margins
y-o-y growth in Value of New Business (VNB). We remain committed to the long-term association with Max Life as its promoter and bancassurance partner. With the far-reaching regulatory changes in insurance sector of late and the significant long term growth aspects, we believe that Max Life offers enhanced value creation opportunities for us.
The oversight on Bank’s subsidiaries remains an essential element of our ‘One Axis’ strategy. We have taken several initiatives to strengthen our well-established and integrated Subsidiaries Governance framework under the supervision of the Subsidiary Management Committee (SMC). We also realigned and strengthened the leadership teams across our capital markets facing subsidiaries during the year to drive our next phase of growth.
Our wining mindset is reflected in multiple external recognitions that the Bank received for its performance. The Bank was adjudged #1 on the Quality Index for both Large Corporate and Middle Market Banking in the Greenwich Banking Survey for the second year in a row. The Bank’s project NEO that signifies our aspiration to become the leading Digital Wholesale Bank in India, received several accolades including the ‘Best BFSI Customer Experience award’ for NEO API Banking Suite, ‘Best BFSI MSME Support award’ for NEO Connect at the prestigious Dun & Bradstreet BFSI & Fintech Summit 2023 and the Asset Triple A Digital Award.
The various awards won by the Bank during the year including ‘Data Engineering Excellence award’ at Cypher 2022 for our personalisation project, ‘The Retail Banker’s International Asia Trailblazer award’ for trailblazing use of AI and Machine Learning in Financial Services space and Economic Times DataCon award for ‘Modern and Agile Data Architecture and Infrastructure’ further validated our leadership position in newage technologies
I am also pleased to share that we were ranked in the Top 10 of the Kincentric Best Employers in India survey and we were certified a ‘Great Place to Work’ for the second consecutive year. These external recognitions reflect the positive culture change in the Bank and the investments we have made in our people and technology.
Our balance sheet remains resilient with healthy capital position and bestin-class asset quality metrics. During the year, we increased our provision coverage ratio by 600 bps to 81% while maintaining significant additional non NPA provisioning buffers of over H11,900 crores, that translated to standard asset coverage ratio of 1.42%, among the highest in the industry. The Bank’s asset quality too remains among the best-in-class with net NPA declining further by 34 bps to 0.39%. The Bank has also maintained amongst the lowest standard COVID-19 restructuring portfolios that stood at 0.22% of Bank's gross customer assets.
The Bank’s self-sustaining capital structure with overall capital adequacy ratio at 17.64% and CET 1 ratio of 14.02% ensures that we are well capitalised to drive our growth ambitions.
In a rapidly evolving financial landscape, technology and product innovation with ‘openness and agility’ to adapt to evolving customer needs remain critical to achieve success.
We have been a leader in cloud adoption with our multi cloud-first strategy and cloud-native micro services-based architecture that has helped us to deploy over 75 initiatives on cloud. We have also accelerated the delivery across businesses by investing in emerging technologies with creation of nearly 3,000 RPA bots and 1,480+ automated processes.
Our investments in new-age data science and engineering platforms like Big Data Lake, Micro Services-based Architecture, etc. continue to deliver value as we have now deployed 100+ diverse use cases in 10+ business domains to make data-driven business decisions. We continue to leverage our strength in Data Analytics to further drive distinctiveness in customer experience, as we took personalisation to next level with 10,000+ hyperpersonalised nudges across 2,500+ customer features. Our initiative on universal underwriting where our goal is to provide credit access for every eligible Indian leveraging alternate data, continues to scale up well. We also improved our BitSight rating, a key risk indicator of overall cybersecurity to 800 from 770 last year, highlighting our strong focus on risk and governance.
In the last three years, our IT team strength has more than doubled with over 2.5x increase in total technology spends, as we continue to focus on building critical capabilities and best-inclass resilience across our business operations.
The multiple large-scale transformation projects that we have been running across the Bank have started yielding positive outcomes across the key businesses. Project ‘Triumph’ has been instrumental in improving the productivity of liability sales channel and improving the quality of deposits with 870 bps increase in share of premium segment in Retail SA balances. On the retail assets side, projects like ‘Unnati’ and ‘SBB Sankalp’ have been instrumental in improving TAT and driving higher growth, respectively. On the payments side, the projects ‘Zenith’ and ‘Kanban’ have helped to improve our market positioning in cards and merchant acquiring businesses.
We have also made strong progress in Project NEO towards our ambition of building a world class Digital Wholesale Bank. Our path-breaking digital banking platform NEO witnessed strong adoption from corporates with 1,000+ client engagements since its launch. Our marketleading transaction banking API suite and best-in-class corporate developer portal offers a strong product market fit that resulted in 3x y-o-y growth in transaction volumes.
The fiscal year 2023 was a breakout year for our digital banking platform Axis 2.0. Our early leadership in building proprietary in-house digital native capabilities with full stack engineering, product and a design team of 400+ people have started yielding results.
Our ‘Axis Mobile’ app today is the world’s highest rated app at scale with 4.8 rating on Google Play Store and nearly 2 million+ reviews. It also serves as the largest branch for the Bank with over 20 million customer registrations, ~12 million monthly active users, 250+ services and over 67% of the service requests serviced digitally.
Axis 2.0, our end-to-end digital business unit, is now operating at scale with over 20 products across liabilities, loans, investment products, insurance and forex accounting for 15% to 85% of incremental sales for these products. It also contributed to our customer obsession journey with Net Promoter Scores (NPS) for Axis 2.0 products being 10-30 percentage points higher than their physical equivalents.
Our API (Application Programming Interfaces) Developer Portal, that has been the 1st in industry to facilitate simplified end-to-end digital developer onboarding journeys, now boasts of strong and wide suite of over 400 open APIs for Retail, Wholesale and Connected banking solutions. The Bank now has 95+ strategic partnerships in the digital space offering true end-to-end digital experience to customers across the spectrum.
In the current integrated environment, Account Aggregator (AA) ecosystem and Open Credit Enablement Network (OCEN) are likely to make significant impact in digital lending to underpenetrated segments across Retail and MSME. We were the first Bank to launch digital lending through AA framework in fiscal 2022 and have since scaled our AA-linked business significantly.
We continue to invest in technologies to empower our employees to increase their productivity and drive customer delight. Our multiyear distinctiveness programme ‘Sparsh’ continues to progress in the right direction as we strive to become India’s most customer-obsessed Bank. Several initiatives taken across the Bank through combined approach of embedding critical behaviours and building institutional capabilities through Personalisation and Digital, have resulted in upto 33% improvement in our Net Promoter Scores across the Retail and Wholesale Bank. This is a multi-year journey and we will continue to invest with the aim to cover the entire Bank in this Financial Year.
During the year, we went live with ‘Siddhi’ – a super app that’s built on modern tech stack with cloud native development integrates 35+ backend systems to empower our colleagues to engage more meaningfully with customers and offer them instant solutions. This is a multiyear journey, and our vision of Siddhi app is to actually personalise it for every employee of the Bank.
Our distinctiveness initiative around Bharat Banking continues to make strong progress. Multiple macro factors including improvement in physical and digital infrastructure, evolution of the technology stack, efficient delivery of various government schemes in the retail and MSME space, etc. have provided strong tailwinds to the Rural and Semi Urban (RuSu) or ‘Bharat’ markets.
We scaled up the distribution footprint in this segment to 2,137 branches complemented by a large CSC (Common Services Centres) network of 60,600+ VLEs (Village Level Entrepreneurs) that grew 50% y-o-y. We also collaborated with marquee rural-focused customer and fintech players, launched eKYC based CASA platform through partnership ecosystem and went live with five partners on digital co-lending platforms to further penetrate rural supply chains and access new customer segments.
As a result of our focused initiatives across products, processes and partnerships, we achieved the highest ever yearly disbursements, 26% growth in rural advances and a 15% y-o-y growth in deposits from ‘Bharat’ branches. The growth has been across all the major product lines backed by improving margins, PSL asset accretion and lower credit cost. We are confident of continuing the growth momentum and creating distinctiveness in Bharat markets.
We have built a fair, diverse and performance-driven culture, guided by the principles of transparency, meritocracy and our five Core Values that drive our behaviour and actions at work.
We also remain fully committed to strengthen and enhance the Risk and Compliance culture of the Bank in order to build long-term sustainability and trust with our customers and other stakeholders.
We have redefined conventional workplace practices with over 3,700 employees and freelancers working from anywhere under GIGA-Anywhere and majority of the employees in our large offices being part of the hybrid working model. We also continued to invest in building their skills and provided them avenues for progressing their careers through our flagship talent management initiatives and internal job programmes.
The community continues to be a critical stakeholder for us. The Axis Bank Foundation, under its Sustainable Livelihoods Program, crossed the significant milestone of supporting 1.3 million households as part of its mission to reach 2 million rural households by the year 2026.
We made strong progress in our ESG-aligned commitments that we had published last year by surpassing the targets we had set for ourselves for the fiscal across Retail and Wholesale Banking to sectors with positive social and environmental outcomes. We also surpassed the overall diversity ratio target for the year with women employees representing 25.7% of the overall workforce.
The progress made in our ESG commitments continue to reflect in Bank’s steady performance at key ESG assessment and recognition platforms. The Bank featured on the prestigious FTSE4Good Index for the sixth consecutive year in 2022 while improving its ratings across platforms like S&P Dow Jones, MSCI and CDP.
We, at Axis Bank, remain confident on the growth opportunities in the Indian economy. The banking industry is currently well placed with loan growth being strong across the key segments, margins and asset quality being the best in recent years along with healthy capital position. As India heads towards a $5trillion economy, the opportunity to leverage some of the emerging trends like China plus 1, MSME and ‘Bharat’ acting as engines of growth, rapid evolution of the next-gen public digital infrastructure like account aggregator, OCEN and ONDC in financial services space is immense.
We believe that the large banks with stronger balance sheets, innovative and holistic product propositions, robust technological infrastructure and digital capabilities to deliver better customer experience would continue to gain higher market share.
We are well positioned to take advantage of these trends.
Given the powerful integrated platform we are building, we will continue to grow 400 to 600 bps faster than the industry, in the medium to long term. The significant strides we made during the year on our customer obsession journey, digital capabilities, Bharat Banking and successful acquisition of Citibank India Consumer Business further give us the confidence in sustaining this performance.
I thank our internal and external stakeholders for their continued support and faith in our strategy, the chosen areas of distinctiveness and our relentless approach to execution excellence. We as a Bank remain committed to our ‘Open to Win Together’ tenet while working hard towards building an all-weather institution that will stand the test of time.
In the last four years, we have transformed the Bank to a stronger, more consistent and sustainable franchise. Our building blocks are firmly in place with robust growth in our focused businesses, strong operational performance, healthy capital and balance sheet position to continue delivering sustained profitable growth.