Bank crossed the
USD 1Billion mark (6217 cr) this year in net profits. 455 branches were opened
this year in which 298 were in unbanked areas. Deposits grew by 11% and
advances grew by 16%. Net profit grew by
27%. However the EPS growth was muted at
11% due to dilution of shares. ROE stood
at 18% which is lower than the average in the past 4 years. This again could be
attributed to the equity dilution. ROA
stood healthy at 1.78%. Total number of branches and extensions stands at 2402
and the ATM were at 12922. Bank is
adequately capitalized BASEL III capital Adequacy Ratio (CAR) at 16% and Tier 1
CAR at 12%.
Deposit growth is
led by savings bank deposits. Current account deposits remained flat due to
slow economy. Retail led the growth in advances side as well contributing 38%
growth while rest remained at just 8% growth. Fee and other income growth was
at 15%. Profit per employee stood at around 15 lacs and the business per
employee stood around 12cr. Net Interest Margins was healthy at 3.81%. NIM
improved was mainly due to two factors viz CASA deposit improvement and equity
dilution which reduced the cost of funds. Cost of deposit was at 6.43% and the
yield was at 9.59%. Fee income growth was lower due to muted corporate
activity. Banks continues to keep its
costs down and the cost to income ratio stood at healthy 40.8% compared to
42.6% last year. Gross NPA stood at 1.22 compared to 1.06 and Net NPA at 0.4
compread to 0.32% last year. Provision coverage stood at 78%.
On daily average
basis the CASA share of total deposits stood around 39% with retail forming the
major deposit (54%) now. Domestic CASA
and retail term deposits formed 78% of the total domestic deposits. Secured
loans accounted for 87% of the loans which comprised of predominantly
mortgages. Home loans accounted for 63%. Auto loans at 12% and personal and
credit cards at 10%. Retail loans are
sourced through branches and 132 asset sales centers. About 2/3 of Incremental
sales comes from existing loan customer which shows repeat business stickiness.
About 1/3 incremental sales comes through the branches. Bank is the 5th largest credit card issuer in
the country and has about 2.5 lac POS terminals. Bank is established in 29
staes and 5 UTs.
Corporate credit
is internally rated. Not sure what that means to the rating quality. 61% of
outstanding and more than 80% of incremental credit is rated A and above which
means the overall percentage of A rated assets is likely to go up. AAA rated
loans are at 11%. Bank has 7 international offices primarily to support Indian
corporates who have expanded business overseas.
Restructured
assets continue to be a concern as it mounted this year as well. As of date the
total restructured asset stood at 7754.86 cr which forms 3.37% of the total
advances. Bank has huge trading
transactions in derivatives like interest rate swaps, forward contracts etc
which is very confusing and not understandable. The exposure ( 4,814,91 Cr) seems
to be very very high and that may make it vulnerable to a post Lehman collapse
kind of situation. Their hedging
transactions are very limited. Hope they
bring down their derivative transaction book down to reasonable levels.
This has been a
very average year for Axis bank and I remain cautiously optimistic on this one
going forward.
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