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Informist, Thursday, Apr. 24, 2025

 

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--Axis Bk: Prioritised profit over growth on uncertain macro, tight liquidity
--CONTEXT: Comments by Axis Bank management at post-earnings press conference
--Axis Bank: Don't see any material issues for portfolio from tariffs
--Axis Bank: Operating environ improving; hopeful about growth, profit FY26
--Axis Bank: Cost of deposits has started to trend down
--Axis Bank: Stress in credit card book stabilising

 

NEW DELHI/MUMBAI – The uncertainty caused by the US' tariff war is not expected to hurt corporate loan demand as of now, with Axis Bank having conducted an examination of its portfolio for the same. However, the bank remains watchful of how the policies keep evolving, Rajiv Anand, Axis Bank's deputy managing director, said Thursday.

 

"On tariffs, we have done a fairly elaborate exercise, bottom-up, looking at our portfolio. At this point in time, we don't see any material issues with the portfolio," Anand said in a post-earnings media call. "I don't think tariffs are impacting demand for money at this point in time. Corporates continue to be cautious as far as private capex is concerned. But more importantly, there is ample cash on corporate balance sheets at this point in time. So, therefore, we do expect that corporate demand going forward will be relatively muted," Anand added. As on Mar. 31, Axis Bank's corporate loans were up 8% on year at INR 2.99 trillion.

 

Thursday, Axis Bank reported a net profit of INR 71.18 billion for Jan-Mar. While the bottomline was down 0.2% year-on-year, it beat analysts' expectations of INR 67.13 billion. Shares of the bank, which published its quarterly results after market hours, ended at INR 1,207.10 on the National Stock Exchange on Thursday, unchanged from Wednesday.

 

Speaking to reporters on the call, Amitabh Chaudhry, managing director and chief executive officer, said Axis Bank had prioritised profitability over growth in 2024-25 (Apr-Mar) on account of the uncertain macroeconomic environment and tight liquidity conditions. "As we enter FY26, we believe the operating environment is improving, which should help us drive both growth and profitability," Chaudhry added.

 

While corporate advances were up 8% at the end of March, Axis Bank's retail loans grew 7% to INR 6.23 trillion. The bank, which has been calibrating the growth of its retail book due to asset quality pressures, saw fresh slippages of INR 48.05 billion in Jan-Mar, up from INR 34.71 billion a year ago but lower than INR 54.32 billion in Oct-Dec.

 

"As we see early signs of improvement on that (retail book), we will be opening up the acquisitions on those segments as well. Specifically, we have taken certain action to calibrate the originations on our unsecured book and we are seeing the early positive results of that. As we continue to see the improvements, we will build that back up," Arjun Chowdhry, Axis Bank's group executive for affluent banking, NRI, cards/payments and retail lending, said.

 

The bank is already seeing stabilisation in its card portfolio, although personal loans will take "a few more quarters to show improvement". With the bank having made upgrade classification criteria more strict for some types of loans, it expects a negative impact on credit costs and upgrades and recoveries in FY26 compared to FY25. In conjunction with the seasonality that exists in slippages in the first quarter of a financial year, Axis Bank's slippages are seen high in Apr-Jun before easing. Cost of deposits, meanwhile, has started to trend down. The bank, earlier this month, lowered interest rates on savings accounts.

 

When asked to comment on the Reserve Bank of India's final guidelines on the Liquidity Coverage Ratio that kick-in from FY27, Chief Financial Officer Puneet Sharma said the impact on Axis Bank's balance sheet is "neutral" on a static balance sheet basis. "But the balance sheet is dynamic and keeps evolving. So it would be more prudent for us to comment on this closer to the implementation date than today," Sharma added.

 

In Jan-Mar, Axis Bank's average liquidity coverage ratio was 118%. Monday, the RBI provided some relief to banks by lowering the additional run-off factor on retail deposits enabled with internet and mobile banking to 2.5% from the 5% mooted by the draft norms last year. The central bank had said that based on banks' data as at the end of December, the net impact of the new norms "will improve the LCR of banks, at the aggregate level, by around 6 percentage points as on that date".  End

 

Reported by Siddharth Upasani and Vaishali Tyagi

Edited by Deepshikha Bhardwaj

 

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