Axis Bank Ltd 532215
Q1 2014 Earnings Call Transcript

Transcript Call Date 07/18/2013

Somnath Sengupta - Executive Director, Corporate Center: Thank you, and good evening, ladies and gentlemen. Thank you for being on this call. I welcome to you to our conference call with the presentation on the Bank’s performance in the first quarter, and I have with me in this call, as was mentioned, my colleagues, Mr. V. Srinivasan, ED, Corporate Banking; and Mr. Sanjeev Gupta, President and CFO. At the end of this presentation, we will be glad to respond to your questions.

Q1 of FY 2014 began on a note of optimism with cumulative result of reform measures initiated since the middle of FY ’13, diesel price hikes, FDI liberalization, attempts at fiscal consolidation and ample global liquidity.

In a vote of confidence on prospects for the future, Fitch had upgraded India’s sovereign outlook to stable from negative. However, since the end of May, financial market volatility has reemerged with perceptions of continued domestic policy in Asia, made worse by fears of global liquidity, tightening by U.S. Federal Reserve. While there is a marginal improvement in India’s macroeconomic fundamentals, core inflation is falling. The current account deficit is thought to be reined in. Attempts are made to keep the fiscal deficit at budgeted levels. There are sufficient concerns, which prevent a definitive view on a revival of growth. India’s external environment, in particular, might remain vulnerable.

The bottom line is that investment needs to increase. We hear of steps being taken to debottleneck critical segments like coal, power, railways, et cetera. Even if implemented, the effects will only become evident by the end of this fiscal year or in the next. We believe that India’s FY ’14 growth will edge up based on better agri production, increased government spending and a modest increase in exports, following a mild global recovery.

However, system credit growth is likely to remain subdued. Notwithstanding the various challenges and the fact that growth in the economy has been tepid, the Bank has fared well with strong performance since from its core businesses. So, let me now describe to you the highlights of the Bank’s financial results for Q1 FY 2014. Net profit in the quarter rose to INR 1,409 crores from INR 1,154 crores last year, registering a growth of 22.14%.

Net advances increased INR 1,98,151 crores registering a Y-o-Y growth of 16%. This increase was largely driven by a strong growth in retail loans, which rose 40% Y-o-Y and now accounts for 29% of the total loan book, against 24% last year.

Non-retail loans recorded an increase of 8% Y-o-Y in which the SME segment grew well at 27% Y-o-Y. The total deposits were INR 2,38,441 crores and grew 7% Y-o-Y with lower growth of term deposits and the result of the infusion of capital funds in Q4 last year.

The Bank continue to focus on growing low-cost CASA deposits and total CASA grew by 16% Y-o-Y, with savings bank deposits and current deposits growing 20% and 11% respectively. On a daily average basis, total CASA deposits grew 17%, constituting 39% of the total deposits, again 36% last year, and on a (NDA) position, current and savings deposits accounted for 42% of the total deposits.

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