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Message from Management

Fostering a Powerful
Corporate India

In fiscal 2023, we made strong progress in our medium-term GPS journey as we stepped up growth in the Wholesale Bank and strengthened our proposition as a strong relationship-led franchise in order to deliver profitable and sustainable outcomes.

Rajiv Anand
Deputy Managing Director

The fiscal 2023 was yet another remarkable year for Corporate India as it weathered uncertain global macro environment to pursue its growth ambitions. With corporate balance sheets at their healthiest in more than a decade and several domestic macro levers in place, the new private capex cycle has well and truly begun. The increase in export demand, rebound in consumption, and public capex contributed to an uptick in the manufacturing activities of the corporates and their spending plans.

Our strategic focus in Wholesale Bank has been to deliver relationship RAROC-focused growth within our risk framework, leveraging our distinctiveness around ‘One Axis’,

Digital and Customer Centricity. During the year, we stepped up growth in the Wholesale Bank with domestic corporate loan book up 24% led by broad-based growth across our coverage segments. The Wholesale Bank’s profitability too saw strong improvement led by our focus on driving higher growth in focus segments, backed by strong risk architecture and our prudent policies.

Strong Relationship-led Franchise, Serving Clients Requirements Across the Capital Structure

We have over the last four years transitioned the Wholesale Bank from an asset-focused business model to a strong relationship-led franchise, with the improvement in rating mix and diversification of book towards well-rated corporates. Today, we are amongst the best and most comprehensive Wholesale Banking franchise, serving our clients requirements across the capital structure, be it in the form of term loans, working capital, domestic, and offshore bonds or equity.

Over the last few years, we have significantly reinforced our client focus in the Wholesale Bank led by strengthening the organisation architecture, leadership and coverage teams. This has meant getting deeper into certain segments and geographies to pursue emerging opportunities across select sectors and further sharpen our approach in the market.

We have also improved our customer engagement and productivity aided by multiple technologydriven transformation projects and operational processes. During the year, we added close to 700 and 5,500 new credit relationships in the Corporate and Commercial Banking segments, respectively.

We continue to deliver ‘One Axis’ to our customers. From, traditional banking products like loans, working capital, transaction banking services and debt capital markets to investment banking and asset management solutions, and retail banking products like Burgundy wealth management, salary and trusteeship services, forex and commercial credit cards. In fiscal 2023, 81% of the Burgundy Private and Burgundy accounts were sourced through the Wholesale Banking and CBG segment. Our concerted efforts across the coverage and product segments, and subsidiaries to serve clients continue to be recognised externally, with Bank receiving several key awards and accolades. 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. We continue to lead the Debt Capital Market League tables and were conferred the Number 1 arranger for Rupee Bonds in CY2022 by Bloomberg for the 16th consecutive year.

Delivered Disproportionately Higher Growth in Our Focus Segments

We believe that MSME (medium and small and medium enterprises) lending will be the growth driver for the banking industry over the next decade, just like how retail was in the previous decade. The MSME segment remains strategic priority for us as it brings granularity to the wholesale book, offers high RAROC and is PSL accretive business.

Given the diversity of MSMEs in India, one of the strengths that we bring to this segment is our ability to recognise the different segments and provide customer-specific solutions. Our distinctive ‘One Axis’ approach towards leveraging our capabilities across the Bank, be it Branch Banking, Wholesale Banking Products, Treasury, Wealth Management and our subsidiaries like A.TReDS, Axis Capital and Axis Finance allows us to offer comprehensive solutions to these enterprises and get the maximum share of their wallet.

The concerted efforts resulted in the strong growth performance in our focused segments like CBG and Mid Corporate that together have nearly doubled in book size in last three years. The share of Mid Corporate and SME advances in overall Wholesale book has increased from 30% in fiscal 2019 to 36% in fiscal 2023 end, thereby bringing in a greater level of granularity to the overall portfolio while contributing to the PSL agenda.

Our strategy to expand geographical footprint to accelerate new customer acquisition, and ability to offer multiple products to existing customers backed by analytics and technology, continues to play out well in these segments. During the year, new credit relationships in CBG segment grew by 69% with the NTB (New to Bank) book balances up 34% y-o-y.

A combination of our differentiated approach towards customer and product selection, our well-diversified book and strong credit underwriting has helped us to keep the risks under control in MSME segment. The asset quality and risk metrics in CBG segment continue to hold up quite well for us with net slippages of `282 crores in fiscal 2023. The net NPAs in CBG segment further declined by 23 bps y-o-y to 0.33% with provision coverage at 71%.

We also remain focused on the MNC and New Economy segment where we see vast available opportunity to cater to growing banking needs of start-ups across working capital loans, transaction banking, employee banking, forex, among others. Today, we have about a 30% market share, and we bank 60% of unicorns in the country led by our integrated coverage approach.

During the year, we continued to focus on serving Indian corporates with global operations through our consolidated overseas branch operations in Dubai, Singapore and GIFT City, India, offering them an entire spectrum of financial services. Our overseas book continues to be dominated by high rated Indian conglomerates and PSU entities. The Bank’s Dubai International Financial Centre (DIFC) won the ‘Customer Service Excellence’ award at the Middle East International Business Awards. It also received the much acclaimed Excellence in Banking and Innovation" award at the "Le Fonti International Awards 2023".

Our Solution-oriented Approach Helped Us to Retain Our Dominant Position in Government Business

We retained our strong positioning in the Government business led by our strong relationship management and a solution-oriented approach across deposits, payments, collections and liquidity management. Our endeavour has always been to provide the best-in-class technology platform through our beyond banking solutions as we stand committed towards the beneficiaries, community, and the society by working closely with the Central and State Government organisations.

During the year, as part of the Fund Disbursement Management Solution (FDMS), we went live with our end-to-end digital payment solution tailored for fund management, tracking and payments for various Government projects and schemes under Central sponsored, Central sector and State schemes. We also launched Integrated Financial Management System (IFMS), that involved direct Integration of State Treasury with Axis Bank Payment solution under agreed model of Single Nodal Account (SNA), for payment to beneficiaries and MIS of transaction status for the various schemes launched under the Central Sponsored Schemes.

Our path-breaking digital banking platform NEO, continued to witness strong adoption from corporates. Our market-leading transaction banking API suite and best-in-class corporate developer portal offers a strong product market fit with 1,000+ client engagements since launch with 3X y-o-y growth in transaction volumes.

Strengthened Our Proposition as a Transaction Bank and Gained Scale Across Product Segments

One of the big pivots that has also happened on the profitability side over the last four years is the change in fee profile from majorly creditlinked fees to a more sustainable transaction banking fee franchise.

We have invested significantly in talent and expertise to build a cohesive Transaction Banking and Treasury franchise, with focus on simplification, innovation and growth. During the year, we engaged with the customer across their capital structure and captured multiple noncredit revenue streams to become their ‘transaction Bank of choice’. We won significant mandates across current account, cash management, trade finance, sector specific smart solutions and government businesses driven by our technology-led offerings. Resultantly, the transaction banking, forex and trade-related fees constituted 78% of Wholesale Banking fees in fiscal 2023, up nearly 10 percentage points in last four years.

We continued to maintain leadership position across products with market share of ~31% in IMPS, 20% in the Bharat Bill Payment ecosystem and 11% in foreign LC. During the year, we won MeitY's DigiDhan Award for on-boarding the highest number of billers on BBPS for the third consecutive year. We also improved our positioning in NEFT from 4th to 2nd rank with market share of 11% in fiscal 2023.

Made Strong Progress Towards Becoming Best in Class Digital Wholesale Bank

Our path-breaking digital banking platform NEO continued to witness strong adoption from corporates. Our market-leading transaction banking API suite and best in class corporate developer portal offers a strong product market fit with 1,000+ client engagements since launch with 3X y-o-y growth in transaction volumes.

The efforts put in by teams across Wholesale Banking products, Digital Banking and IT over the last two years to launch innovative banking and beyond NEO propositions have been widely acknowledged by the Industry. During the year, the Bank received multiple external recognitions including the ‘Best BFSI Customer Experience award’ for NEO API Banking Suite and the ‘Best BFSI MSME Support award’ for NEO Connect at the prestigious Dun & Bradstreet BFSI & Fintech Summit 2023. Project NEO also won the Asset Triple A Digital Award and ET BFSI Excellence Award for Customer Engagement Initiative of the year. In fiscal 2024, we expect significant uptick in customer adoption and subsequent monetisation of this platform.

We continued to maintain leadership position across products with market share of ~31% in IMPS, 20% in the Bharat Bill Payment ecosystem and 11% in foreign LC. During the year, we won MeitY's DigiDhan Award for on-boarding the highest number of billers on BBPS for the third consecutive year.

We continue to maintain rigour around risk management and have now expanded ESG risk coverage in credit appraisal under our ESG Policy for Lending that has been in place since fiscal 2016. We are also incrementally scaling down exposure to carbon-intensive sectors in our wholesale lending portfolio. As part of our efforts to drive positive climate action and achieve the Sustainable Development Goals, we have committed to incremental financing of ₹30,000 crores under Wholesale Banking to sectors with positive social and environmental outcomes by fiscal 2026.

Benign Credit Environment and Improvement in Pricing to Support Broad Based Credit Growth

The corporates have de-levered significantly in the last seven years and the corporate cash flows continue to remain strong. While the banking system has not lent to corporates in a meaningful way over the last 3 to 5 years, I believe the new credit growth cycle has just started. The overall capacity utilisation in manufacturing sector has now exceeded the long-term averages and there is strong demand from companies across sizes and sectors.

We witnessed better pricing environment in the large corporate segment towards the second half of the year. The rising yields on corporate bonds, and higher interest and hedging costs on External Commercial Borrowing (ECB) too played a part in relatively higher banking sector credit to industry. The pricing environment remains quite conducive at this point for banking industry to be able to continue to support credit growth across sectors and industries.

The corporates have consolidated their banking relationships with top 5-6 banks in the last few years and we at Axis Bank continue to be at the table for all the large deals. I remain bullish on our ability to push pedal on growth in this segment.

Warm Regards,

Rajiv Anand
Deputy Managing Director