Axis Bank Management Discussions
Macro-economic Environment Global economy
In CY 2023, the global economy outperformed even the most optimistic expectations. Global GDP growth was 0.6% higher than initially expected, with the United States ("US") being the primary contributor to the positive surprise. US GDP grew 2.5% vs. 0.3% expected at the beginning of the year. Optimism was boosted by better-than-expected easing of price pressures across advanced economies despite stronger growth. However, our analysis shows that US growth was supported by unsustainable fiscal expansion, and that the stall in US disinflation seen in the last few months can persist, shrinking the space for monetary easing in CY 2024. We therefore expect cost of capital to remain elevated globally.
The Chinese economy has also held up better than expected despite the ongoing correction in its property market; worryingly, underlying drivers here too point to growing medium-term risks. Chinese policymakers have redirected credit earlier given to real-estate to manufacturing and infrastructure. Further, nearly all incremental investments are through state-owned enterprises and governments. Private sector investments are growing only in capital intensive industries, and the return on assets in aggregate is already at two-decade lows. This is potentially threatening to firms globally in these sectors, including electronics, automotive, energy storage and equipment for renewable energy.
Thus, China is now again exporting goods deflation to the rest of the world. Its policies are likely to trigger more trade barriers globally, as governments respond to the onslaught of Chinese imports in these industries. The impact of the "China + 1" trend thus needs to be reassessed, as Chinese manufacturers are trying to rapidly increase their global market share in a range of sectors. Growth in industrial production in Emerging Markets ex-China has been lagging that of China for over a year now.
Geopolitical uncertainty has intensified, with the Russia-Ukraine war dragging on, and the complex balance of power in west Asia being destabilized. While for now the only adverse economic effects of these so-far localised conflicts is in higher shipping costs and higher energy prices, we have entered a new era where geopolitical risks are likely to remain higher.
Indian economy
The Indian economy continued to grow at a moderately strong pace, also surprising forecasters positively. The positive surprises came primarily from investments: gross capital formation is nearly back to the pre-pandemic path, even though consumption is still 11% below it, and overall GDP is more than a year behind. The real-estate cycle has turned after a nearly decade-long downturn, and industry utilization in sectors like power generation, cement and steel is triggering new investments.
Indias growth surprised positively despite four major headwinds. First, the government is sticking to its fiscal consolidation roadmap, accelerating the pace from 50bps of GDP deficit reduction in fiscal 2023 to 60bps in fiscal 2024 and now targeting 70bps in fiscal 2024. Second, the RBI is keeping interest rates high and liquidity tight, as it waits for headline inflation to moderate. Third, exports of both goods and services have slowed sharply from the peak. Fourth, the elevated cost of capital globally has slowed capital flows to India and made refinancing of foreign loans harder for Indian firms.
Going forward, share gains in both goods and services exports should support Indias headline trade data. The structural drivers of Indias share gains in global services exports, that is, disaggregation of global services value-chains, rapid increase in global cross-border telecom bandwidth, and the surge in remote-working are adding to the demographic trends supporting growth in Indias services exports to developed markets. Indias share of modern services exports is now a remarkable 8%. Similarly, improving competitive metrics, like in infrastructure and value-chain development in electronics, are likely to help India gain share of global goods exports, which had stagnated for nearly a decade.
Developments in the Banking system
Adjusted for a major merger in the financial system, banking system non-food credit grew 16.5% YoY as of March 8, 2024, while deposit growth was up 13.1% YoY. The sustained gap between growth in credit and deposits pushed the Credit- Deposit ratios to the highest levels in decades, will limit credit growth and may push down net interest margins.
In our view weak deposit growth is primarily due to the central bank keeping liquidity conditions tight. We believe there are two underlying reasons for this: first, growth and inflation forecasts are rising despite the tight monetary conditions, and headline inflation is still above its target level. Second, due to the risks emanating from fiscal problems in the US and the EU, potentially disruptive industrial policies in China and geopolitical turbulence, global macroeconomic risks are still elevated.
Credit growth was dominated by services (this includes credit to NBFCs) followed by the retail segment, and credit to agriculture was strong as well. However, industry segment growth remained subdued. Within industry, growth in MSMEs continues to be faster than large corporates. Strong growth in unsecured personal loans drove the regulator to raise risk weights.
Overall, the banking system remains well capitalized to meet the needs of a growing economy, and early signs of growth in private investments, and credit risks remain subdued.
Prospects for fiscal 2025
Over the past decade, consensus estimates for Indias trend growth rate declined from around 8% in FY 2007-12 to the current range of 6-6.5%. COVID cast new shadows on potential trend growth. We believe the growth slowdown in the previous decade was due to cyclical factors, in particular the real-estate downturn, and trend growth remains above 7%.
This consists of: a) 1% annual growth in labour input, as the number of workers of working age continues to expand, and female labour force participation and hours worked should rise; b) 2% to 2.5% annual growth in total-factor-productivity due to the state still willingly ceding space to the private sector, strong productivity growth in services, improvement in macro (highways, railways) as well as micro-infrastructure (like piped water, internet, electricity and cooking gas connections), and technology transfer emanating from the surge in global capability centres; and c) 4%-plus growth in capital formation due to a cyclical recovery in real-estate and private sector capex.
We expect inflation to average 4.5% in fiscal 2025, with continued disinflation in core inflation, as the economy remains nearly a year behind its pre-pandemic path, keeping labour in surplus. However, headline inflation would remain elevated due to food prices, hurt by repeated weather disruptions.
Bank credit growth is estimated to be around 13% in fiscal 2025, normalising from high levels given constraints in funding this as well as slowing of credit to retail and to NBFCs. If the central bank eases liquidity conditions, credit growth could improve. Continued upgrades to Indias GDP growth could also trigger more credit-funded capital investments, boosting credit growth. Continued tightness in external financing could boost bank lending.
OVERVIEW OF FINANCIAL PERFORMANCE
Operating performance
( in crores)
| Particulars | 2023-24 | 2022-23 | % change |
| Net interest income | 49,894 | 42,946 | 16% |
| Non-interest income | 22,442 | 16,143 | 39% |
| Operative revenue | 72,336 | 59,089 | 22% |
| Operating expenses | 35,213 | 27,040 | 30% |
| Operating profit | 37,123 | 32,049 | 16% |
| Provisions and contingencies | 4,063 | 2,653 | 53% |
| Profit before tax and exceptional items | 33,060 | 29,396 | 12% |
| Exceptional items | - | 12,490 | - |
| Profit before tax after exceptional items | 33,060 | 16,906 | 96% |
| Provision for tax | 8,199 | 7,326 | 12% |
| Net profit | 24,861 | 9,580 | 160% |
Operating revenue increased by 22% Y-o-Y (year-on-year) from 59,089 crores in fiscal 2023 to 72,336 crores in fiscal 2024. Net interest income (NII) rose 16% from 42,946 crores in fiscal 2023 to 49,894 crores in fiscal 2024. Non-interest income consisting of fee, trading and other income increased by 39% from 16,143 crores in fiscal 2023 to 22,442 crores in fiscal 2024. Operating expenses (excluding exceptional items for fiscal 2023) grew 30% from 27,040 crores in fiscal 2023 to 35,213 crores in fiscal 2024. As a result, the operating profit grew by 16% to 37,123 crores from 32,049 crores reported last year. Provisions and contingencies increased by 53% from 2,653 crores in fiscal 2023 to 4,063 crores in fiscal 2024.
There was a charge in the Profit and Loss Account for fiscal 2023 of 12,490 crores towards exceptional items arising from the acquisition of Citibank India Consumer Business. As a result, on a reported basis the net profit for fiscal 2024 increased by 160% and stood at 24,861 crores, as compared to the net profit of 9,580 crores last year.
Net interest income
( in crores)
| Particulars | 2023-24 B | 2022-23 | % change |
| Interest on loans | 87,107 | 64,554 | 35% |
| Interest on investments | 20,011 | 18,179 | 10% |
| Other interest income | 2,251 | 2,431 | (7%) |
| Interest income | 109,369 | 85,164 | 28% |
| Interest on deposits | 45,542 | 31,733 | 44% |
| Other interest expense | 13,932 | 10,485 | 33% |
| Interest expense | 59,474 | 42,218 | 41% |
| Net interest income | 49,894 | 42,946 | 16% |
| Average interest earning assets1 | 1,225,443 | 1,069,241 | 15% |
| Average Current Account and Savings Account (CASA)1 | 398,848 | 351,085 | 14% |
| Net interest margin (NIM) | 4.07% | 4.02% | |
| Yield on assets | 8.92% | 7.96% | |
| Yield on advances | 9.89% | 9.00% | |
| Yield on investments | 6.70% | 6.21% | |
| Cost of funds | 5.25% | 4.28% | |
| Cost of deposits | 4.86% | 3.94% |
1 computed on daily average basis
NII constituted 69% of the operating revenue and increased by 16% from 42,946 crores in fiscal 2023 to 49,894 crores in fiscal 2024. Yield on assets increased by 96 bps while cost of funds increased by 97 bps. NIM improved 5 bps on a year on year basis to 4.07% in fiscal 2024.
During this period, the yield on interest earning assets increased from 7.96% in fiscal 2023 to 8.92% in fiscal 2024 partially due to improved pricing and largely due to improved mix of better yielding assets. The yield on advances increased by 89 bps from 9.00% in fiscal 2023 to 9.89% in fiscal 2024. ~70% of the loans of the Bank are floating rate loans, linked to external/ internal benchmark rates. Repo rate remained constant for fiscal 2024 at 6.50%. The yield on investments also increased by 49 bps during fiscal 2024.
The increase in benchmark rates in the previous year led to higher cost of funds with repricing of liabilities during the course of the current financial year. Cost of funds increased by 97 bps from 4.28% in fiscal 2023 to 5.25% in fiscal 2024. The Bank continued its focus on both CASA plus Retail Term Deposits (RTD) as part of its overall deposit growth strategy. Cost of deposits increased to 4.86% from 3.94% last fiscal mainly due to increase in funding cost of term deposits. Daily average CASA ratio as a proportion to deposits decreased by 103 bps in fiscal 2024 to 42.54% from 43.57% in fiscal 2023, which also resulted in an increased cost of funds for fiscal 2024.
Performance against the drivers for the NIM improvement journey of the Bank in fiscal 2024 is as follows:
• Improvement in Balance Sheet mix: loans and investments comprised 88% of total assets as at the end of fiscal 2024, improving 168 bps Y-o-Y;
• INR denominated loans comprised 96% of total advances at the end of fiscal 2024, improving 130 bps Y-o-Y;
• Retail and Commercial Banking Group (CBG) advances comprised 71% of total advances as at 31 March, 2024, improving 303 bps Y-o-Y;
• Balance outstanding in low-yielding priority sector shortfall deposits declined by 9,007 crores Y-o-Y with priority sector short fall deposits comprising 1.5% of total assets as at 31 March, 24 as compared to 2.3% at 31 March, 2023;
• Composition of liabilities measured through average CASA% stood at 42.5% for fiscal 2024.
The Bank also earned interest on income tax refund of 75 crores in fiscal 2024 as compared to 85 crores in fiscal 2023. The receipt, amount and timing of such income depends on the nature and determinations by tax authorities and is hence neither consistent nor predictable.
Non-interest income
( incrores)
| Particulars | 2023-24 | 2022-23 | % change |
| Fee income | 20,257 | 15,858 | 28% |
| Trading profit | 1,731 | (242) | - |
| ---of which | |||
| Provision for depreciation in value of investments | 431 | (596) | - |
| Miscellaneous income | 454 | 527 | (14%) |
| Non-interest income | 22,442 | 16,143 | 39% |
Non-interest income comprising fees, trading profit and miscellaneous income increased by 39% to 22,442 crores in fiscal 2024 from 16,143 crores last year and constituted 31% of the operating revenue of the Bank.
Fee income increased by 28% to 20,257 crores from 15,858 crores last year and continued to remain a significant part of the Banks non-interest income. It constituted 90% of non-interest income and contributed 28% to the operating revenue in fiscal 2024. Growth in reported fee income was mainly on account of increase in business across segments.
Segmental composition of Fee Income
| Particulars | 2023-24 | 2022-23 | % change |
| Retail Banking | 72% | 67% | 5% |
| Wholesale Banking | 25% | 29% | (4%) |
| Commercial Banking | 3% | 4% | (1%) |
Retail Banking fees constituted 72% of the total fee income of the Bank in fiscal 2024 and grew strongly at 36% on a year on year basis. Fees from retail cards grew 46% on a year on year basis in fiscal 2024 while retail non-card fees also grew strongly by 28%.
Fee income derived from the Wholesale Bank group accounted for 25% of the Banks total fee income for fiscal 2024 as against 29% in fiscal 2023. Within Wholesale Banking, granular transaction banking fees grew 13% on a year on year basis. Fee income from the Banks CBG (Commercial Banking Group) that lends to small and medium enterprises accounted for 3% and 4% of the Banks total fee income for fiscal 2024 and fiscal 2023 respectively.
During the year, trading profits without considering impact of provision for depreciation increased by 268% to 1,299 crores from 353 crores last year mainly on account of higher profits on the SLR portfolio in fiscal 2024 as compared to fiscal 2023, and profit on sale of certain strategic investments. There was a write-back in provision for depreciation on investments of 431 crores in fiscal 2024 as compared to a provision for depreciation of 596 crores due to interest rate movements in fiscal 2023.
The Banks miscellaneous income in fiscal 2024 stood at 454 crores compared to 527 crores in fiscal 2023, comprising mainly income from display of publicity material amounting to 224 crores and income from sale of Priority Sector Lending Certificates (PSLC) amounting to 57 crores in fiscal 2024.
Operating revenue
The operating revenue of the Bank increased by 22% to 72,336 crores from 59,089 crores last year. The core income streams (NII and fees) constituted ~97% of the operating revenue, reflecting the stability of the Banks earnings.
Operating expenses
| Particulars | 2023-24 | 2022-23 | % change |
| Staff cost | 10,933 | 8,797 | 24% |
| Depreciation | 1,334 | 1,145 | 17% |
| Other operating expenses | 22,946 | 17,098 | 34% |
| Operating expenses | 35,213 | 27,040 | 30% |
| Cost : Income Ratio | 48.68% | 46.09% | |
| Cost: Asset Ratio | 2.55% | 2.25% |
YOY growth rate in operating expenses was 30% in fiscal 2024 as compared to 16% in fiscal 2023 with operating expenses increasing to 35,213 crores from 27,040 crores last year. The Bank continued to invest in technology and human capital for supporting the existing and new businesses. 29% of total cost increase was on account of investments in technology and future growth, 5% of the total cost increase was volume linked, 13% of the total cost increase was on account of integration expenses and balance 53% was business as usual expenses.
Staff cost increased by 24% from 8,797 crores in fiscal 2023 to 10,933 crores in fiscal 2024, primarily due to annual wage revision and a 14% increase in employee strength during fiscal 2024 from 91,898 as at end of fiscal 2023 to 104,633 as at the end of fiscal 2024.
Other operating expenses increased by 34% from 17,098 crores in fiscal 2023 to 22,946 crores in fiscal 2024. The increase is primarily due to increase in volume linked costs coming from rising business volumes, investments in technology to support future business growth, higher collection expenses and integration expenses relating to acquisition of Citi India consumer business.
Operating expenses pursuant to the transitional services agreement and other integration expenses for acquisition of Citibank India Consumer Business have been recognised in the profit and loss account for the full fiscal 2024 as compared to only for one month in fiscal 2023. During the year, the Bank has migrated part of the Citibank portfolio and is scheduled to migrate other acquired business by first half of fiscal 2025. The Bank has recognised integration expenses of 1,106 crores in fiscal 2024.
The Operating Expenses to Assets ratio increased to 2.55%, higher by 30 bps compared to 2.25% last year.
Operating profit
During the year, the operating profit of the Bank (excluding exceptional items for fiscal 2023) increased by 16% to 37,123 crores from 32,049 crores last year on account of strong growth in operating revenues and partially offset by growth in operating expenses.
Provisions and contingencies
( incrores)
| Particulars | 2023-24 | 2022-23 | % change |
| Provision for non-performing assets | 6,453 | 6,025 | 7% |
| Recoveries from written off accounts | (2,773) | (2,885) | (4%) |
| Provision for restructured assets | (1) | (34) | - |
| Other Provisions | |||
| - Provision for country risk | 6 | 8 | (25%) |
| - Provision for standard assets including unhedged foreign currency exposure | 300 | 468 | (36%) |
| - Additional provision for delay in implementation of resolution plan | 49 | (180) | - |
| Particulars | 2023-24 | 2022-23 | % change |
| - Provision on AIF investments | 206 | - | - |
| - Provision for COVID-19 and MSME Restructuring | (279) | (599) | - |
| - Provision for other contingencies | 102 | (150) | - |
| Total Provision and contingencies | 4,063 | 2,653 | 53% |
During fiscal 2024, provisions (other than provisions for tax) increased 53% YOY to 4,063 crores from 2,653 crores last year. Key items of provisions are explained below -
Provisions for NPAs:
The gross slippages in % terms declined YOY. The Bank provided 6,453 crores towards non-performing assets compared to 6,025 crores last year. The increase in provision for non-performing assets is primarily on account of higher net slippage ratio at 0.64% in fiscal 2024 as compared to 0.52% crores in fiscal 2023.
Recoveries from written off accounts:
The Banks recoveries from written off accounts in fiscal 2024 was marginally lower, amounting to 2,773 crores as against 2,885 crores in fiscal 2023.
Other provisions:
• Provisions for standard assets:
The Bank provided 300 crores for standard assets including unhedged foreign currency exposure compared to 468 crores last year.
- During the year, the Bank made a provision for standard assets of 208 crores as against a provision of 434 crores made in fiscal 2023.
- Further, during the year the Bank had created provision of 92 crores as against a provision of 34 crores made in fiscal 2023 for unhedged foreign currency exposure.
• During fiscal 2024, the Bank created provision for delay in implementation of resolution plan of 49 crores. As compared to the same there was a write back in provision of 180 crores in fiscal 2023 pursuant to implementation of resolution plan in certain accounts.
• In fiscal 2024, the Bank has made provision of 206 crores in respect of investments in Alternate Investment Funds (AIFs)/Venture Capital Funds (VCFs) pursuant to RBI guidelines issued on investments in AIFs.
• During fiscal 2024, there was a write-back of 279 crores in provision for loans subjected to COVID-19 and MSME restructuring mainly on account of slippages and recoveries, as compared to a write back in provision of 599 crores in fiscal 2023.
As at the end of fiscal 2024, the cumulative non NPA provisions held by the Bank amounted to 12,134 crores with a standard assets coverage ratio (all non NPA provisions / standard assets) of 1.26%.
Provision for tax
Provision for tax for fiscal 2024 stood at 8,199 crores as compared to 7,326 crores for last year.
Net profit
Reported Net profit for fiscal 2024 increased by 160% YOY to 24,861 crores as compared to the net profit of 9,580 crores last year.
Asset Quality Parameters
The asset quality metrics continued to improve during the fiscal, with reduction in NPA ratios year on year. The Bank added 14,431 crores to Gross NPAs during the year with the ratio of Gross NPAs to gross customer assets declining to 1.43%, at the end of March 2024 from 2.02% as at end of March 2023. The
Bank added 5,388 crores to Net NPAs after adjusting for recoveries and upgradations of 2,912 crores and 6,131 crores respectively and the Banks Net NPA ratio (Net NPAs as percentage of net customer assets) decreased to 0.31 % from 0.39%. The Banks provision coverage ratio excluding prudential write-offs increased further during the fiscal and stood at 79%. The Banks accumulated prudential write-off pool stood at 39,683 crores as at end of fiscal 2024.
During the fiscal, the quantum of low rated pool of BB and below accounts (excluding investments and non-fund based exposure) decreased and stood at 2,978 crores as compared to 3,478 crores at the end of fiscal 2023. The aggregate outstanding in such low rated pool of BB and below investments and non-fund based accounts was 700 crores and 1,453 crores respectively as at the end of March 2024.
The fund based outstanding of standard loans under COVID -19 resolution scheme at 31 March, 2024 stood at 1,528 crores or 0.14% of gross customer assets. The linked non fund based outstanding for which there has been no change in original terms stood at 751 crores. Outstanding restructured loans under the MSME scheme stood at 259 crores. The Bank holds a provision of 535 crores on these restructured assets.
Key ratios
| Particulars | 2023-24 | 2022-23 |
| Basic earnings per share (?) (excluding exceptional items) | 80.67 | 71.37 |
| Diluted earnings per share () (excluding exceptional items) | 80.10 | 71.03 |
| Book value per share () | 486.74 | 406.24 |
| Return on equity (%) | 18.86% | 8.47% |
| Return on assets (%) | 1.83% | 0.80% |
| Return on equity (%) (excluding exceptional items) | 18.86% | 18.38% |
| Return on assets (%) (excluding exceptional items) | 1.83% | 1.82% |
| Net interest margin (%) | 4.07% | 4.02% |
| Profit per employee ( lakh) | 25.29 | 10.94 |
| Loan to Deposit ratio (Domestic) | 88.88% | 87.05% |
| Loan to Deposit ratio (Global) | 90.31% | 89.27% |
Basic Earnings per Share (EPS) was 80.67 compared to 71.37 last year, while the Diluted EPS was 80.10 as compared to 71.03 last year, excluding exceptional items.
Return on Equity (RoE) increased to 18.86% for fiscal 2024 from 18.38% in fiscal 2023, excluding exceptional items. Return on Assets (RoA) increased to 1.83% in fiscal 2024 from 1.82% last year, excluding exceptional items. Book Value per Share increased by 20% to 486.74 from 406.24 last year.
Loan to Deposit (CD) ratio of the Bank as on 31 March, 2024 was at 90.31% with a domestic CD ratio of 88.88%.
Balance Sheet parameters Assets
( incrores)
| Particulars | 2023-24 | 2022-23 | % change |
| Cash and bank balances | 1,14,454 | 1,06,411 | 8% |
| Government securities | 2,47,816 | 227,754 | 9% |
| Other securities | 83,711 | 61,061 | 37% |
| Total investments | 331,527 | 288,815 | 15% |
| Retail advances | 583,264 | 487,571 | 20% |
| Corporate advances | 277,086 | 268,334 | 3% |
| SME advances | 104,718 | 89,398 | 17% |
| Total advances | 965,068 | 845,303 | 14% |
| Particulars | 2023-24 B | 2022-23 | % change |
| Fixed assets | 5,685 | 4,734 | 20% |
| Other assets1 | 60,474 | 72,063 | (16%) |
| Total assets | 1,477,209 | 1,317,326 | 12% |
1 includes Priority Sector Lending deposits of 21,557 crores (previous year 30,564 crores)
Total assets increased by 12% to 1,477,209 crores as on March 31, 2024 from 1,317,326 crores on March 31, 2023, driven by 14% growth in advances and 15% growth in investments.
Advances
Total advances of the Bank as on March 31, 2024 increased by 14% to 965,068 crores from 845,303 crores as on March 31, 2023, largely driven by healthy growth in the retail segment. Retail advances comprised 60% of total advances and grew by 20% to 583,264 crores, corporate advances comprised 29% of total advances and grew by 3% to 277,086 crores and SME advances constituted 11% of total advances and grew by 17% to 104,718 crores.
Domestic advances of the Bank as on March 31, 2024 grew by 15% to 936,465 crores from 811,827 crores as on March 31, 2023. Further, domestic corporate advances of the Bank as on March 31, 2024 increased by 6% to 250,293 crores from 236,035 crores as on March 31, 2023.
The retail lending growth was led by Small Banking Business (SBB), personal loans, cards and rural loans. Home loans remain the largest component in retail segment and accounted for 28% of retail loans, rural lending (Bharat Banking) 16%, loans against property (LAP) 11%, personal loans and credit cardswere 19%, auto loans 10% and SBB loans were 10%, while non-schematic loans comprising loan against deposits and other loans accounted for 6%.
Investments
The investment portfolio of the Bank grew by 15% to 331,527 crores. Investments in Government and approved securities, increased by 9% to 247,816 crores. Other investments, including corporate debt securities, increased by 37% to 83,711 crores. 82%
of the government securities have been classified in the HTM category, while 48% of the bonds and debentures portfolio has been classified in the AFS category.
Other Assets
Other assets of the Bank as on March 31, 2024 decreased to 60,474 crores from 72,063 crores as on March 31, 2023, primarily on account of decrease in Priority Sector Shortfall deposits to 21,557 crores as on March 31, 2024 from 30,564 crores on March 31, 2023.
Liabilities and shareholders funds
| Particulars | 2023-24 B | 2022-23 | % change |
| Capital | 617 | 615 | 0.3% |
| Reserves and Surplus | 149,618 | 124,378 | 20% |
| Total shareholders funds | 150,235 | 124,993 | 20% |
| Employee stock option outstanding (net) | 827 | 424 | 95% |
| Deposits | 1,068,641 | 946,945 | 13% |
| - Current account deposits | 157,268 | 149,120 | 5% |
| - Savings bank deposits | 302,132 | 297,416 | 2% |
| - CASA | 459,400 | 446,536 | 3% |
| - Retail term deposits | 355,623 | 303,706 | 17% |
| - Non-retail term deposits | 253,618 | 196,703 | 29% |
| - Total term deposits | 609,241 | 500,409 | 22% |
| Borrowings | 196,812 | 186,300 | 6% |
| - In India | 160,734 | 148,787 | 8% |
| - Infra bonds | 22,331 | 23,480 | (5%) |
| - Outside India | 36,078 | 37,513 | (4%) |
| Other liabilities and provisions | 60,694 | 58,664 | 3% |
| Total liabilities and shareholders funds | 1,477,209 | 13,17,326 | 12% |
Shareholders funds
Shareholders funds of the Bank increased from 124,993 crores as on March 31, 2023 to 150,235 crores as on March 31, 2024. This is mainly on account of profits earned during the year.
Deposits
The total deposits of the Bank increased by 13% to 10,68,641 crores against 9,46,945 crores last year. Savings Bank deposits reported a growth of 2% to 302,132 crores, while Current Account deposits reported increase of 5% to 157,268 crores. As on March 31, 2024, low-cost CASA deposits stood at 459,400 crores, and constituted 43% of total deposits. On a daily average basis, Savings Bank deposits, increased by 16% to 281,432 crores, while Current Account deposits grew by 9% to 117,416 crores. The percentage share of CASA in total deposits, on a daily average basis, was at 43% compared to 44% last year.
As on March 31, 2024, the retail term deposits grew 17% and stood at 355,623 crores, constituting 33% of the total term deposits. Non-retail term deposits grew 29% over fiscal 2023.
Borrowings
The total borrowings of the Bank increased by 6% from 186,300 crores in fiscal 2023 to 196,812 crores in fiscal 2024. During the year, the Bank also raised 3,851 crores through issuance of Infra bonds with a maturity of 7 years.
Other Liabilities and provisions
Other liabilities of the Bank as on March 31, 2024 increased by 3% over the year to 60,694 crores as on March 31, 2024 from 58,664 crores as on March 31, 2023.
Contingent Liabilities
( in crores)
| Particulars | 2023-24 ? | 2022-23 | % change |
| Claims against the Bank not acknowledged as debts | 2,453 | 1,995 | 23% |
| Liability for partly paid investments | - | 239 | - |
| Liability on account of outstanding forward exchange contracts | 840,387 | 604,835 | 39% |
| Liability on account of outstanding derivative contracts: | 821,190 | 622,949 | 32% |
| - Interest Rate Swaps, Currency Swaps, Forward Rate Agreement & Interest Rate Futures | 779,085 | 582,019 | 34% |
| - Foreign Currency Options | 42,105 | 40,930 | 3% |
| Guarantees given on behalf of constituents | 128,127 | 102,363 | 25% |
| - In India | 106,812 | 91,764 | 16% |
| - Outside India | 21,315 | 10,599 | 101% |
| Acceptances, endorsements and other obligations | 59,087 | 52,361 | 13% |
| Other items for which the Bank is contingently liable | 57,648 | 56,507 | 2% |
| Total | 1,908,892 | 1,441,249 | 32% |
Capital Management
The Bank continues its endeavour for greater capital efficiency and shoring up its capital adequacy to enhance shareholder value.
The Banks overall capital adequacy ratio (CAR) under Basel III stood at 16.63% at the end of the year, well above the benchmark requirement of 11.50% stipulated by Reserve Bank of India (RBI). Of this, the Common Equity Tier I (CET I) CAR was 13.74% (against minimum regulatory requirement of 8.00%) and Tier I CAR was 14.20% (against minimum regulatory requirement of 9.50%). As on March 31, 2024, the Banks Tier II CAR under Basel III stood at 2.43%.
The organic business of the Bank accreted 44 bps (net) of CET I in fiscal 2024. Change in regulations adversely impacted CET I by 72 bps.
| Movement of CET I during fiscal 2024 | % |
| CET I as on March 31, 2023 | 14.02 |
| Accretion | 2.36 |
| Consumption | (1.92) |
| Regulatory impact | (0.72) |
| CET I as on March 31, 2024 | 13.74 |
The Banks Risk Weighted Assets (RWA) to Asset ratio as at the end of fiscal 2024 was 70%. The Banks capital position continues to be strong and is sufficiently robust for it to pursue growth opportunities with adequate liquidity buffers.
The following table sets forth the capital, risk-weighted assets and capital adequacy ratios computed as on March 31, 2024 and March 31, 2023 in accordance with the applicable RBI guidelines under Basel III.
| ( incrores) | ||
| PARTICULARS | 2023-24 | 2022-23 |
| Tier I capital | 147,633 | 124,048 |
| Tier II capital | 25,231 | 26,116 |
| Out of which | ||
| - Tier II capital instruments | 16,992 | 19,308 |
| - Other eligible for Tier II capital | 8,239 | 6,808 |
| Total capital qualifying for computation of capital adequacy ratio | 172,864 | 150,164 |
| Total risk-weighted assets and contingencies | 1,039,313 | 851,335 |
| Total capital adequacy ratio | 16.63% | 17.64% |
| Out of above | ||
| - Common equity tier I capital ratio | 13.74% | 14.02% |
| - Tier I capital ratio | 14.20% | 14.57% |
| - Tier II capital ratio | 2.43% | 3.07% |
BUSINESS OVERVIEW
Five years ago, we launched our ‘Growth Profitability and Sustainability strategy, also known as the ‘House of GPS. House of GPS as it stands today, continues to reflect our aspirations, and remain relevant. Our overall strategy, and specific business and function strategies are aligned with our core philosophy of GPS -
• Growth: Accelerate deposit growth, focus on profitable advances and achievement of leadership positions across our focus areas and scale-up of subsidiaries and Axis Digital Bank.
• Profitability: Growth in fee income, improve operating efficiency and optimize costs, sweat existing infrastructure, and maintain control over credit cost.
• Sustainability: Strengthen governance across the Bank to enhance risk management, robust audit and compliance culture and retain high quality talent.
As part of the GPS initiatives, under the ‘One Axis vision, we are focused on creating a ‘one-stop solution for banking needs, by bringing in the strengths of the subsidiaries along with the Bank.
We have several noteworthy achievements in fiscal 2024. Focus on granular, risk adjusted, higher yielding segments has enabled us to deliver on our ROE aspirations and control credit costs. Our best-in-class mobile banking application, digital and analytical capabilities coupled with use of emerging technology such as generative AI, gives us the right to win in digital banking. We are currently on the path on integrating Citis consumer business and are expected to complete this process by first half of fiscal 2025. Amidst global recovery, India continues to be an economic bright spot, giving us an incredible opportunity to tap into the growing capex, infrastructure and investment boom. We remain well capitalized with our CET- 1 accretion adequate to fund organic growth. Our transformation projects have enabled us to reach closer to our GPS ambitions - ‘Neo for Business (offers end-to-end digital journeys with DIY onboarding, for banking as well as beyond-banking needs of MSMEs), ‘Siddhi (a super app that empowers our colleagues to engage seamlessly with customers), granularization and premiumization of liability franchise, focus on scaling-up select segments such as personal loans / credit card advances / select tiers within wholesale banking franchise. We have also started yielding visible results due to our investments in long-term ‘distinctiveness drivers - ‘Digital 2.0 (becoming Indias Best Tech Bank), Bharat Banking (tapping the high growth potential in rural and semi-urban markets), ‘Sparsh (customer obsession program to aid improvement in NPS rankings).
We remain committed to our GPS strategy of working towards Growth, Profitability and Sustainability over the medium- term and aim to become a resilient, all-weather franchise.
Retail Banking
The Bank has over the last decade built a strong Retail Banking franchise that continues to be a key driver of the Banks overall growth strategy. The Banks focused customer-centric approach, strong and differentiated product offerings, along with its wide distribution network remain the core pillars through which it continues to serve the financial needs and aspirations of its customers.
The retail business segment provides a complete bouquet of products across deposits, transaction services, wealth management and lending products for retail customers, small businesses, NRIs (non-resident Indians) and retail institutions, backed by innovative, digital-first solutions.
The Bank offers a wide range of retail liability products, including savings accounts, current accounts, fixed deposits, recurring deposits, and other customized deposit options, catering to the diverse needs of customers. Retail lending products include home loans, loans against property, automobile loans, two-wheeler loans, commercial vehicle loans, personal loans, gold loans, education loans, credit cards, small business banking loans and agriculture loans among others.
The Banks Retail Banking business unit also offers other products and services such as debit and credit cards, forex cards, bill payment services and wealth management services. The Bank also distributes third party products such as mutual funds, life and non-life insurance policies, government bonds, etc.
The Banks strategy in Retail has been to gain a larger share of the wallet of existing customers, acquire quality new customers, and deliver a best-in-class experience, thus building customer loyalty. In line with its customer centric approach, the Bank continued its strong focus on holistic customer lifecycle management, led by its strong data analytics and technology, to engage in meaningful conversations and provide the right product proposition. The Bank has made strong progress in digitization of sales, service, and branch operations to offer seamless and intelligent banking experience to its customers.
The integration of acquired Citibank India Consumer Business remains on track with business metrics trending in line with the Banks expected outcomes. Through this acquisition, the Bank gained access to the large and affluent customer franchise with a bouquet of fee-oriented and profitable business segments, that included a quality cards portfolio, an affluent wealth management clientele and meaningful retail granular deposits.
The Bank believes that it is well-positioned to capitalize on growth opportunities in the Indian retail financial services market, led by its strong liability franchise, well diversified products portfolio and robust data analytics and technological capabilities.
During the fiscal year 2024, the retail segment contributed 76% to the Banks deposits in the form of CASA and Retail Term Deposits; 60% to the Banks advances and 72% to the Banks fee income.
Retail Deposits
A key element of the Banks retail deposits strategy has been the shift from a ‘product centric to a ‘customer centric approach with an objective to have sharper growth in deposits from existing to Bank (ETB) as well as new to Bank (NTB) customers. The Banks micro market focused approach to address the specific needs of customers in a particular district leveraging its strong distribution reach and ‘One Axis approach, has seen strong progress in the last four years with 6% increase in the number of districts where its market share in deposits stood more than 5%.
The Bank remains focused on garnering high quality, stable and granular retail deposits to drive its balance sheet growth. During the year, the Bank made multiple strategic changes across its deposit franchise by transforming the NTB engine while reinforcing the ETB engagement supported by differentiated product propositions and digital enablers. The Bank institutionalized the operating rhythm across the 60,000+ front-line resources, enabled and empowered the core liability channels to be self-sufficient to generate and convert deposits, built a robust customer life cycle architecture to drive higher engagement, and mobilised all parts of the Bank to garner deposits. The Bank also continued to maintain a steady share of CASA deposits in overall deposits mix at 43% as at end of fiscal 2024.
The growth trajectory of retail term deposits continued to improve through the year as the Bank continued to focus on new individual customers leveraging its strong acquisition channels. This has been achieved through innovative offerings such as the industry-first full KYC digital term deposit, digital alliances, and a revamped mobile banking journey that allows for quick and easy FD booking. The Bank also launched a digital journey to source deposits from its existing non-CASA base. As a result, the percentage share of retail and small business customer deposits in total term deposits increased by 241 bps YOY in fiscal 2024.
Premiumization of deposits franchise continues to be an important imperative for the Bank. During the year, the Bank introduced several new product propositions that included ‘Sampann, ‘Suvidha Salary Program and renewed ‘Priority Banking program among others to offer the best of banking services and life experiences under one bouquet.
‘Sampann premium Savings Account proposition to cater to Rural and Semi-Urban regions
During the year, the Bank launched ‘Sampann, a premium banking proposition as part of its commitment to the customer centric model for RuSu (Rural and semi-urban) customers.
The proposition is specifically curated to ensure equitable access for RuSu customers to premium banking services like family banking program, dedicated relationship managers, complimentary healthcare and protection coverage, and much more. The proposition also provides the RuSu customers easy access to necessary financial resources to meet their diverse needs, whether it is expanding their business, purchasing a vehicle, or owning a home by offering discounts on processing fees for agri loans, gold loans, tractor funding and auto loans. Through ‘Sampann, the Bank also offers exclusive benefits such as discounts on farming devices, agriculture inputs like pesticides, seeds, and a wide range of value-add services like crop advisory, weather forecasting, and real-time information about mandi prices etc. Since the launch of Sampann Savings account in August-23, there has been a strong growth in monthly average acquisition run rate in rural and semi urban locations.
Suvidha Salary Account proposition to win employer mindshare
The Bank continued to work towards leveraging its corporate lending relationships with top corporates to gain higher share in salary segment. During the year, the Bank redesigned its Corporate Salary product proposition to win employer mindshare and get higher employee wallet share.
The Bank enhanced its corporate value proposition by strengthening its corporate servicing architecture setup with dedicated relationship managers and providing the employers with an enhanced corporate payroll, NPS and payments solutions for seamless salary disbursal, corporate cards, etc. The Suvidha Salary program aims to be the financial anchor for Banks consumers as their financial needs evolve across their life stage & career progression over time. Consumers can avail a host of differentiated benefits, which go beyond just a zero-balance account, to include complimentary credit cards, preferential rates on specific retail loans, exclusive insurance benefits, extended family banking privileges, and much more.
The Banks key focus area has been to ensure that the newly opened salary accounts receive timely salary credits while driving higher engagement with the customers. A holistic approach to Corporate Engagement Plan ensured involvement in meeting executives at all levels including the key decision makers to offer them differentiated and premium liability products range. Focused and structured marketing activities were undertaken through the worksites to reach out to a larger and better employee base. As a result of these initiatives, new salary accounts increased by 12% YoY with 26% YoY increase in average salary credits and 23% growth in premium acquisitions.
During the year, the Bank launched digital savings account "Amaze", that offers customers plethora of benefits and annual rewards worth 11,000 for a monthly fee of 200 with flexibility to maintain minimum average monthly balance without worrying about additional charges, thereby redefining transparency in banking.
The Bank extended VCIP digital savings account journey to all the non-branch banking channels to enable them as lead converters. As a next strategic step, the Bank has initiated building lean digital savings co-origination journeys for card and asset customers. Since non-branch banking channels present a huge opportunity to independently source incremental business of savings accounts, select channels were also enabled to open accounts that cannot be opened via VCIP through alternate BYOD platform.
During the year, the Bank further expanded its "hyper-personalisation" engine with over 125+ nudges to drive better customer engagement and improving product per customer through various digital mediums like SMS, Email, Mobile App, Internet banking, Website and WhatsApp. Furthermore, each of these nudges aid the customer to avail the services and products end to end on the platform itself without any physical intervention or visit to the branch.
Branch Banking
To serve the deposit customers better and deepen relationships with them, the Bank has organically built a well-diversified branch network over the years. The Bank continues to look at the segments and demographic areas that are relevant to the Retail Banking strategy, before setting up a branch. The new branch additions have been balanced and well diversified across Metro and Urban locations and RuSu (Rural and Semi Urban) regions as the Bank continues to focus on improving the market share across districts led by micro market focused approach.
During fiscal 2024, the Bank crossed a historical milestone of 5,000 branches as it opened 475 new branches, thereby reinforcing its commitment towards making banking solutions accessible to diversified segments of customers. As on March 31, 2024, the Bank had a domestic network of 5,705 branch banking outlets with 5,365 branches, 3 Digital Banking Units, 12 extension counters, 143 specialised branches, and 182 business correspondence banking outlets. The Bank also has extensive network of 16,026 ATMs and Recyclers, which not only handled the cash deposits and withdrawals, but also served as self-service and fulfilment centres. The Banks geographical reach in India now extends to 693 districts across 28 states and 7 union territories.
Retail Lending
The retail and consumer lending in India continues to be the key driver of growth for the banking sector credit growth led by growing affluent population and changing consumer behaviour.
The Banks Retail loan book has grown strongly at 19.25% CAGR in the last 5 years with significant diversification in mix over time towards focused products. The Banks retail lending strategy remains focused on deepening relationships and crossselling to ETB customers through its wide distribution network while leveraging its own digital platforms and those of its strategic partners to acquire KTB customers backed by its advanced data analytics engine driven underwriting and strong risk management framework.
The Bank has a comprehensive and yet customized product suite to serve the needs of every credit-worthy customer. During the year, the Bank continued its focused approach to drive higher growth in its focused product segments, through business mix optimization in secured segments with high yielding products. Aided by the Banks strong data analytics capabilities, the Banks unsecured segments like Personal Loans and Small Business Loans continued to grow at a faster pace than the overall retail book growth. The Banks unsecured to secured mix in the overall retail book stood at 28:72 as of March 31, 2024.
The Bank has undertaken multiple transformation projects across the product segments to improve the customer experience and productivity of its employees while reducing the overall turn-around times. The Bank continues to focus on digitization of sales, service and branch operations to offer hyper-personalized experience and simplified digital journeys.
During the year, the Banks mortgages segment comprising of Home Loans and Loans against Property (LAP) delivered sequential improvement in growth. During the year, the Bank made progress in its Digital Home Loan journeys by providing real-time sanctions to customers at builder sites for APF (Approved Project Financial) projects. The Banks Maximus Lending platform (MLP) for loans has been instrumental in building strong OEM and corporate partnerships and strengthening its market positioning. The contribution of MLP to total Auto Loan business has increased from 20% in fiscal 2023 to 30% in fiscal 2024.
To accelerate the growth of Personal Loans in a risk calibrated manner, the Bank launched a transformation initiative project ‘Athena in previous fiscal year 2023. As part of this project, multiple initiatives were designed and implemented during the year to deliver higher growth from ETB as well as NTB customers, roll out new end to end digital journeys to expand reach, revamp existing digital journey to enhance customer experience, and to improve efficiency of various channels. Through this initiative, the Bank has ramped up Personal loan disbursal by 47% in fiscal year 2024.
SBB Sankalp, which is a Banks project to improve efficiencies while delivering superior TATs for Business Loans, has been adopted pan India. Physical processing has completely moved to digital or phygital channels. The Bank is working to adopt Sankalp for its working capital business and expects to see similar efficiencies in that line of business. Recent product launches include Quick Overdraft, which is a digital unsecured overdraft product, aimed at meeting customer requirements. The Banks focus on continuously enhancing its product bouquet and its servicing capabilities with deeper adoption of digitization, has helped the Bank to be the partner of choice for MSME customers. This has been a key driver of the Banks growth, with a CAGR of over 40% in the last 4 years.
As the Bank accelerates its loan growth, it continues to invest in strengthening its customer on-boarding scorecards and credit underwriting processes, to ensure right customer selection. Approximately 80% of the Banks loans originate from internal customers with a significant proportion coming through pre-qualified programs, helping to keep portfolio risk within defined guardrails. The Bank is also fine-tuning its scorecards to enable sharper risk differentiation for both ETB and NTB customers. Additionally, the Bank has also entered several strategic partnerships and developed proprietary KTB scorecards on partner data.
The Bank continues to invest in building risk management and analytical capabilities to mitigate risks and improve the profitability of its retail products. The Bank calibrated its underwriting criteria across product lines based on profiles, industries and nature of products and re-calibrated scorecards to reflect the inherent risk in borrower profiles. Through product design and pre-selection, the Bank sources the lower risk customer base and continues to monitor the portfolio by identifying early risk indicators. The Banks prudent credit evaluation policies and processes have enabled it to maintain a well-balanced portfolio and develop a calibrated approach to managing NPAs.
The Bank is confident that its in-house data analytics and digital capabilities, combined with its customer centric approach to deliver distinctive customer experience through multiple transformation projects will enable it to deliver healthy and profitable growth across its product segments.
Bharat Banking
There are several structural changes happening in the Rural & Semi Urban markets such as growing internet penetration, efficient delivery of government benefits, improvement in physical infrastructure, income diversification from agriculture to non-agri sectors, and in agriculture several tailwinds such as crop diversification to milk and poultry, technology adoption, development of agri stack leading to a higher demand for credit in RuSu markets. Axis Bank on the back of large distribution, comprehensive product suite, high vintage book, and an established & profitable operating model in those markets is rightly positioned to build a strong business in Bharat through its Bharat Banking initiative.
Our distribution network has expanded to 2,480+ branches in RuSu markets, complemented by the 64.5k+ strong Common Service Centers (CSC) village level entrepreneurs network. We have enabled additional 340 branches in fiscal 2024 to source gold loans. We have also partnered in large names across industries such as Agritech, Fintech, corporates and NBFCs with deeper rural presence.
Bharat Banking continues to deliver on the growth trajectory with disbursals growing by 30%, rural balance sheet by 32%, and deposits by 12% in fiscal 2024 from the RuSu markets. The balance sheet added in the last 2 years (fiscal 2022 till fiscal 2024) is 1.7x the balance sheet added in the prior 4 years (fiscal 2018 till fiscal 2022). The growth is secular across products and the volumes from CSC channel has increased 1.6x Y-o-Y in fiscal 2024.
The growth is value accretive for the Bank due to higher yield, fee and PSL accretion from the RuSu markets. Our operating revenue continues to grow Y-o-Y and the business is operating at a high risk adjusted return on capital. The fee income is improving on the back of higher penetration and enabling the sales architecture to source alternate revenues such as insurance and forex.
The digital transformation journey is progressing well with the launch of revamped customer journey for farm mechanization and gold loans in fiscal 2024. The Bank showcased digital Kisan Credit Card journey at a G-20 event held in September 2023, and has a clear roadmap to digitize the journey for other high growth products. On its co-lending platform, the Bank went live with 11+ partners during the year and saw a strong momentum in business. The Bank continues to leverage its eKYC platform to mobilise CA, SA and TD from the third party channel.
Several parts of the Bank came together as One Axis to target several ecosystems that exists in Bharat. The Bank launched "Mandi Mitra" to target entire value in the Mandi ecosystem, in partnership with corporates to penetrate into trader, agri input and agri output ecosystem. The objective has been to deepen the reach, offer a comprehensive multi product architecture, and use data to offer customized lending programs.
The credit cost has been under control across businesses, and the Bank continues to sharply track the early warning indicators to take portfolio actions. The Bank has taken several initiatives to create a strong culture of risk & governance across the organization through communication, scorecards, and digitization.
The Bank continues to drive financial inclusion across the country through Government Sponsored Schemes, improving financial literacy through trainings, working with BC partners to distribute banking products, and taking several actions to increase credit & deposit penetration in RUSU markets.
Retail Payments
The payments industry is undergoing a swift transformation, propelled by a notable shift in customer spending habits and an evolving regulatory landscape. A remarkable rise in non-cash transactions has been observed as customers are opting for cashless methods. The governments vigorous efforts to promote digital payments have resulted in a broader acceptance among customers, leading to significant advancements in the industry and presenting a vast opportunity for continued growth.
The payments business continues to be at the core of Banks retail banking strategy as it embodies the face of the franchise, deepening customer engagement and driving higher profitability. The Bank continues to focus on aggressively acquiring new customers led by significant sourcing of fee based cards which yield higher activation and usage outcomes, deepening usage and balances of low risk customers via portfolio programs with strong risk management in place to curb early risk from vulnerable segments.
During the year, the Bank maintained its leadership positioning in credit cards market share with strong growth in acquisitions, cards in force as well as spends. The Bank consistently acquired over 1 million+ cards every quarter with a cumulative ~4.8 million cards acquired in fiscal 2024, led by its strong data analytics capabilities and KTB strategy.
The Bank had 14.2 million cards in force with a market share of 14% as of March 31, 2024. The credit cards business also touched the highest ever yearly spends of 225,242 crores, up 66% YOY, yet another milestone for the business.
The Banks card advances too grew 30% YOY aided by revamped mobile banking platform that has made cross-sell offers easily discoverable on EMIs and loans.
The Bank has entered into co-brand partnerships with industry leading e-commerce, fintech, telecom, fuel, retail, airlines and consumer durable players that enables it to fulfil needs of each and every client segment with differentiated offering. The Bank has been the first choice for partners as well, due to the Banks strong product offerings backed by robust and resilient technology infrastructure.
The Banks ‘Flipkart Axis Bank Credit Card co-branded card achieved yet another significant milestone of 4.13 million cards, establishing itself as one of the most powerful co-branded card offering since its introduction in July 2019. The Banks partnership card spends continued to exceed industry benchmarks in terms of activation and card usage, with better risk outcomes.
During the year, the Bank launched a new partnership with American Express network by introducing ‘Axis Bank Privilege Credit Card on the American Express network. The Bank also strengthened its partnership with NPCI by expanding its product offering on the RuPay network both on proprietary cards and co-brand cards. As a result, the Banks credit card business is now supported by 4 networks thereby offering more choice for customers.
The Bank has strengthened its technology platform over the last couple of years to deliver higher processing capacity, with additional APIs and a PA DSS (Payment Application Data Security Standard) compliant system. During the year, the Banks few key digital initiatives like end-to-end digital issuance, Video KYC, income estimation, etc. with real time decisioning on the partner platform have further resulted in enhanced customer experience.
The Cards business continues to operate within the defined risk guard rails. Stronger onboarding controls to counter emerging early signs of risk combined with sturdier collection practices have helped in managing the asset quality well, thereby providing the Bank confidence to deepen customer engagement and drive business growth.
In its Merchant Acquiring Business (MAB), the Bank became the No.1 merchant acquirer amongst banks during the year with 20% terminal market share as of March 2024. The Bank has been continuously investing on technology, both towards products and merchant user experience.
The Bank offers strong value proposition in MAB, offering products catering to all types of markets with Bharat QR, GPRS, MPOS, Pocket GPRS, Pocket Android, Android POS and new payment acceptance models like Micro Pay & Soundbox. As part of the merchant stack the Bank also has the capability for deep integrations and developing customized solutions such as e-challan, tax collection, spot fine, billing integrations etc. for government and TASC merchants.
The Bank offers an integrated payment gateway (UniPG) solution tailored for Axis Bank customers. This comprehensive solution offers broad spectrum of payment options, including cards and other alternate payment channels. UniPG also features a suite of value-added services such as multi- bank EMI options, a form builder solution, education ERP system among others.
Led by ‘One Axis approach, the MAB team has been successful in taking the Bank to the merchant with a suite of liabilities, assets and third-party products. The Bank has also tied up with ecosystem solution players who are building segment specific solutions to address the customer needs of these segments. During the year, the Bank launched ‘Digital Dukaan a comprehensive digital offering for merchants that empowers them to accept payments through various digital modes and also manage their day-to-day business digitally. The Bank also launched ‘Sarathi, a first of its kind digital onboarding journey to enable seamless and instant installation of Electronic Data Capture (EDC) or Point of Sale (POS) for merchants. Through these solutions, the Bank has been able to deliver strong growth in cross selling, mobilising high value quality CA deposits and sourcing assets.
In the UPI payments space, the Bank continues its efforts towards distinctiveness in becoming one of the leading payment franchises in the country by driving continued growth and focus on seamless customer experience.
The Bank maintained its strong position in UPI with a market share of 26% by value as on March 31, 2024. Further, during the year the market share was 20% as Payer Payment Service Provider (PSP) by volumes and 19% in Payment-to-Merchant (P2M) acquiring throughput as against 17% and 18% respectively. The Bank partnered with new fintech players with the objective of growing the UPI transactions, while continuing to deepen its existing partnerships with tech giants like PhonePe, Google Pay, Amazon and WhatsApp. During the year, the Bank went live with several new lending partnerships, providing
them payments solutions while receiving corporate flows through these partnerships. The launch of RuPay CC on UPI for both issuing and acquiring was a further demonstration of the Banks capability to drive the organic volume growth of UPI transactions. The Bank now has more than 83 crore customer VPAs registered as on March 31, 2024.
The Bank continues to focus on building a robust IT infrastructure and upgrading IT capabilities due to which the Bank has one of the lowest technical decline rates in the industry and is amongst the leading payments solution provider.
Retail Forex and Remittance business
The Bank offers a range of forex and remittance products to its retail customers, which include forex cards, inward and outward wire transfers, remittance facilities through online portal as well as through collaboration with correspondent banks and exchange houses. The Banks active customer base for retail forex products grew by 13% YOY with similar growth in retail forex volumes during fiscal 2024.
The Bank continues to be one of the largest players in prepaid forex card market with its flagship offering of multi-currency card that allows users to load 16 currency options in one card. Forex card digital issuance was enabled for NTB customers in fiscal 2024 along with an enhanced digital journey for existing customers. The digital adoption on forex cards has been consistently growing and more than 80% of the Banks new forex cards are now being issued digitally.
On outward remittances, the Bank has developed digital solutions to partner with fintechs, edtechs, online stockbrokers and aggregators. The turnaround times on Remit Money platform, that enables the NRIs to remit money to India, has been improved from T+5 days to T+1 day for US corridor. During the year, the Bank also enabled fast and cost-effective inward remittances from Singapore leveraging the linkage between Indias Unified Payments Interface (UPI) and Singapores PayNow.
Third Party Distribution
The Bank is one of the leading distributors of third-party products including mutual fund schemes, life insurance, health insurance and other general insurance policies. The Bank offers comprehensive investment and protection solutions, to cater to the diverse needs of each customer segment, adopting tech-enabled delivery mechanisms across all customer touch points. During the year, Third Party Distribution business contributed significantly to Banks retail fee income on back of its strong partnerships, contextual product launches, wide distribution strength and digital initiatives.
With a total mutual fund AUM of 84,593 crores, the Bank continues to be the third largest banking distributor in the industry and had 11.64 lakhs mutual fund customers as on March 31, 2024. The Bank through its dedicated in-house research desk, identifies the best mutual fund schemes based on qualitative and quantitative parameters. Currently, the Bank distributes mutual funds schemes of 22 major Asset Management Companies, through its diversified branch network and digital channels based on the customers lifecycle and investment requirements. The Bank also offers various Alternate Investment Products to its customers from select product providers, as approved by SEBI.
The Bank offers online as well as offline trading services to its customers in collaboration with Axis Securities Ltd under the brand name Axis Direct. Through its branches, the Bank has sourced ~4.3 million total customers for Axis Direct with 5.40 lakhs customers being added in fiscal 2024.
The Bank continued to be one of the largest bancassurance player in terms of both life and non-life insurance volume among private banks with a year-on-year fee growth of 45% in life and 180% in non-life insurance.
The strategy of adopting an open architecture has enabled the Bank to strengthen the penetration in core channels and develop alternate new age avenues for offering a wide range of products to its customers.
The Bank has an innovative user-friendly digital interface - Axis Marketplace - to facilitate distribution of insurance solutions. Axis Marketplace offers third-party products integrated directly with insurance partner systems thereby providing seamless journeys and instant issuance facilities.
The Bank continues to focus on reimagining end to end journeys and build a digital ecosystem for investment products on its mobile banking app and internet banking to ensure seamless access anytime, anywhere.
Wealth Management
The Banks wealth management business ‘Burgundy consolidated its position among the top wealth management franchises in the country as it leveraged the strengths of being a Bank with full stack product offerings, wide distribution, and combined power of acquired Citi business in terms of products and service quality to drive growth. The overall assets under management of Burgundy customers grew to 5.37 trillion as on March 31, 2024
During the year, the Bank celebrated the fourth anniversary of Burgundy Private, its exclusive proposition for UHNI customers with yet another year of strong performance. With customer assets of 1.83 trillion across 10,500+ families including 35 of the Forbes 100 richest Indians and presence across 27 cities, it continues to scale greater heights. The business continued to focus on client acquisition, leveraging the strong operating rhythm built with key business units within the Bank under the ‘One Axis initiatives. During the year, there was a 4-fold increase in acquisitions through the ‘One Axis initiative. Overall, the number of Burgundy Private families has grown 23% YoY.
As part of our initiatives to actively engage and provide exclusive experiences to our Burgundy Private customers, the Bank launched "Burgundy Private Experiences". More than 20 unique events across 8 cities were curated across different genres such as entertainment, art, sports, investment and more. These events helped us cater to the preferences of more than 950 clients through the year. ‘Investment Perspective, an initiative to empower Burgundy customers with knowledge and information on the global and Indian equity & fixed income markets from the senior most fund managers in the industry continued to receive excellent feedback from all customers. This was also extended to NRI customers across multiple cities as part of the home-coming campaign.
Over the past 4 years, Burgundy Private has grown from strength to strength and is now represented by 250+ Burgundy Private Partners with an average working experience of over 17 years. They are supported by 140+ Service Partners to ensure superior service delivery. The Burgundy Wealth Management franchise, as a whole is represented by best-in-class talent consisting of 475+ Relationship Managers, 400+ Premium Service Managers and 115 Wealth Specialists spread across more than 300 branches in India. This has enabled the Bank to take the services to customers beyond the major cities and, into the Tier 2 and Tier 3 cities where the wealth management landscape is experiencing a notable transformation. The Bank has been exploring opportunities in the Bharat Banking branches for customers to start SIPs and invest in other products to help them in their wealth creation journey.
The aspirational need for customers to upgrade their accounts to ‘Burgundy was simplified by launching the improved ‘Upgrade Journey initiative. The customer initiated upgrade journey delivers an exceptional customer experience, featuring among others, a consolidated welcome kit with the upgraded debit card (providing segment-specific benefits), a personalised cheque book and details of all the additional features and benefits. 9,000+ customers have already experienced this new journey and started enjoying the incremental benefits of being a Burgundy customer.
The Bank launched "The Burgundy Promise" with an aim to provide a truly enhanced, distinctive, and industry-first servicing experience to our premium segment customers. Through this unique proposition which is based on three key pillars- defining commitment, measuring performance and transparent communication; the Bank has committed to provide quick resolution on selected services within a defined TAT of 6 working hours, along with a real time tracking mechanism via the digital channels.
The Bank provides wealth management and protection needs through an open architecture strategy and platform. This strategy ensured that the Bank is able to provide all its esteemed customers the very best in products & services based on their needs and profile. During the year, the core wealth management backend system was upgraded to handle much larger scale transactions. The 24x7 digital channels continue to be among the best in industry, and contributed over 4,000 crores of MF gross sales, a 82% growth over last year.
The acquisition of Citibank Indias consumer businesses has accelerated the Banks growth in wealth management and strengthened its position as one of the leading wealth management franchise in the country. These clients have already started benefitting from the better deposit rates, larger product palette across third party products and banking seamlessly using the wider network. The synergy has been playing out well, with strong growth in term deposits and premium of protection related products.
During the year, the Bank applied and received the license as a distributor of capital market products and services at its IFSC Banking Unit (Gift City). The Bank is working towards building an equally strong wealth proposition to service the needs of NRI investors looking to invest in India, and Resident Indians exploring geographic and currency diversification in their portfolio.
Since its inception in 2019, Burgundy Private has consistently pursued excellence in Private Banking, with focus being on building a best-in-class bespoke platform with customer centricity and superior service delivery at its core. The Banks endeavour to provide the best services to the customers and their family members continued to get externally recognised at international forums as the Bank bagged key awards including "Indias Best for Next-Gen" at the Euromoney Global Private Banking Awards 2024 and "Best Private Bank for Digital Marketing and Communication" at the Global Private Banker WealthTech Awards 2024.
The Bank has also built a distinct brand identity for Burgundy Private that embodies credibility and recall through right associations. Burgundy Private continued its collaboration with Hurun India and launched the third edition of "Burgundy Private Hurun India 500 Most Valuable Companies", in February 2024, that focused on leadership of Indias top companies, including those from the new economy.
Priority Sector Lending
The Bank continues to pursue a focused strategy on achieving the Priority Sector Lending (PSL) targets and sub targets prescribed by the regulator. The Bank also continues to undertake activities that promotes financial literacy and awareness of the banking services with an aim to cover the under banked borrowers under this PSL drive.
The Bank has made significant progress in achieving PSL targets by leveraging its distribution strength, underwriting and product capabilities. It aims to become self-sufficient in meeting PSL targets organically in coming years, supported by its Bharat Banking strategy, under which Bank is working towards increasing its presence in Rural and Semi urban geographies across India, that offer high potential for growth in agriculture and rural advances along with MSME lending opportunities. Retail banking segment continues to maintain its focus on MSME lending. During the year, the Bank continued its focus on augmenting the small ticket size loans, crop loans to small and marginal farmers and microfinance business targeted at women borrowers from low income households. The Bank also enhanced its digital lending channels to facilitate quicker turnaround time for sanction and disbursement of loans to MSME borrowers. Additionally, the Bank is actively pursuing partnership opportunity under co-lending and other partnership models to increase credit flow to under-penetrated segment of economy which shall also help in increasing the Banks PSL advances.
The Banks PSL achievement during fiscal 2024 is 46.37% as compared to the stipulated target of 40% of Adjusted Net Bank Credit. The Bank through organic book and purchase of PSL certificates (PSLC) achieved the PSL targets at the headline level as well as at each sub-segment level in fiscal 2024. During the fiscal 2024, the Bank purchased PSLCs of an aggregate amount of ^37,045 crores at a cost of ^819 crores and sold PSLCs of an aggregate amount of ^83,780 crores and earned income of ^57 crores.
Digital Banking
Digital Banking is a key strategic initiative and an area of distinctiveness for the Bank. The Bank was among the first to launch an independent "fully Digital Bank" within the Bank as part of Axis 2.0 strategy. In the last five years, the Bank has made substantial investments in Digital to build inhouse proprietary, distinctive digital native capabilities and deliver end to end digital journeys and products, towards becoming a digital consumer lending powerhouse.
Today, the Bank has over 2,400 people across departments focused on furthering the digital agenda including 800+ people as part of Digital Banking. The Bank has a ~350 member inhouse full stack engineering team, and today a large number of the Banks digital products are built inhouse. Further, the Bank has a large digital product and marketing team of over 400 members and a design team of over 55 members. The Bank has invested in best-in-class platforms across the DevSecOps pipeline, Cloud infrastructure as well as developed its own platforms for design (Sub-zero and Accord).
During the year, the Bank rebranded Axis 2.0 as "Open by Axis Bank", as it upgraded and redesigned the journeys and its mobile app to deliver seamless and personalized end to end customer experiences. The "Open by Axis Bank" mobile banking app is now rated 4.8 both on the Google Playstore and the Apple app store. The Banks mobile banking app is rated as the worlds highest rated mobile banking app on the Google Playstore with over 2.6 million reviews. The Bank has ~14 million monthly active users on its app and on average an active user visits the app 15 -18 times a month.
The Bank today has a large suite of over 25 digital products live as part of "Open" - across assets, liabilities, fee income products. The Bank has built fully digital onboarding journeys for Savings account, Salary account, Current account and Term deposits. Similarly on the assets side, the Bank caters to both unsecured and secured asset journeys across Personal loans, Business loans, Auto-loans, Gold loans, Home loan journeys etc. The Bank also upgraded its end to end digital journeys for Credit Card customer onboarding, cross-sell / up-sell as well as servicing.
In fiscal year 2024, the Bank added several new products / customer propositions in addition to continued investments in existing products. Some of these included "Digital NRI US dollar FD journey in Gift City", Digital business loans platform, new exclusively digital Savings account proposition - Amaze, FD for standalone credit card customers, Digital KCC, etc.
As a result of these, the Bank today is at the forefront of providing cutting edge digital solutions to its customers with significant growth in metrics across digital adoption, usage, transactions, servicing and sales. "Open" by Axis Bank currently contributes ~6% to the Banks overall business led by 33% YOY growth in deposits and 74% YOY growth in loans during the year.
On Digital lending, the Bank has made substantial progress towards becoming a "Digital Consumer lending powerhouse". During the year, the Bank has made strides in enhancing capabilities critical to this business. The Bank is among the market leaders in Account Aggregator ecosystem - a capability critical for underwriting NTB customers in lending.
The Bank launched "One-view" - a feature that allows customers to link other banks accounts by riding on the account aggregator ecosystem. The Bank has also launched a dedicated partnership lending platform and taken it to market with 2 large partners. In addition, there are several other partnerships already in the pipeline for lending as well as other products by "Open".
The Bank has built best in class personalisation capabilities towards its objective of becoming the leading customer centric bank. 10,000+ hyper personalised nudges have been developed across 2,500+ customer features for the "Open" app. This has been augmented by the newly launched "Just for you" section on the app dashboard. The Bank launched a benefits dashboard to enhance transparency on rewards, benefits and fees on Credit cards.
The Bank has also made strong progress in ‘Project Neo, that the Bank had embarked on its transformational journey to be Indias #1 digital Wholesale Bank. Under Project Neo, the integrated journeys across wholesale products and services being experienced by the customers are based on how a customer views their business as opposed to a product led approach. The Bank continues to invest in technology stack to ensure that it leverages the latest technologies, addressing for system resiliency, scalability and agile enhancements.
"Neo for Business" - the Banks MSME focused platform that caters to banking and beyond banking services has seen over 60,000 customer registrations in the last 6 months. The Banks Corporate Developer Portal now includes over 125+ Open Banking APIs as part of its wide transaction banking portfolio offerings. Neo for Corporates, the path breaking new age digital banking platform which encompasses a fully cloud based solution has also enabled the Bank to hyperscale products while offering a single integrated digital platform across payments, trade, forex etc. Axis Neo Connect, the Banks industry first plug and play solution for seamless ERP integration to wide domain of banking API services continues to see strong uptake across customer segments.
The Banks efforts in the digital space continued to get recognition in the industry. The Bank has partnered with RBI Innovation Hub, and got an opportunity to demonstrate its digital journeys (CBDC app and Digital KCC) at showcase events organized by RBI during G20 summit discussion.
Wholesale Banking and products
The Bank today is amongst the best and most comprehensive Wholesale Banking franchises in the country catering to all the banking needs of a corporate across lending products, investment banking, transaction banking and capital markets with linkages to the Retail Bank.
During the fiscal year 2024, the Bank continued with its approach to deepen client relationships and provide holistic banking solutions by capturing the entire corporate value-chain leveraging ‘One Axis capabilities across the Banks various business segments and its subsidiaries.
The Banks Wholesale Coverage Group provides entire bouquet of products and services including cash credit facilities, demand and short-term loans, project finance, export credit, trade, forex and derivative solutions, payments and cash management systems, tax payments, salary accounts and trust services, commercial and credit cards etc. with the support of a well-defined Wholesale Banking Products team. The Banks offerings are specially designed to meet all financing requirements to our coverage clients which now encompasses a diverse customer group.
The Banks Wholesale Coverage serves diverse customer segments ranging from SMEs, Start-ups, Large and mid-corporates, MNCs, Financial institutions and intermediaries, PSUs and Government departments through its sharpened coverage structure, as follows:
• Mid-Corporates & Medium Enterprises Group (MEG): Covering all corporate clients with turnover between 100 crores and 1,500 crores;
• Large Corporates: Covering all corporate clients with turnover greater than 1,500 crores;
• Focused Segmental Coverage: Covering PSUs, Government-owned entities, Multi-national companies, Start-ups, Real Economy corporates and Financial institutions
The Bank has strengthened its proposition as a transaction bank of choice across Current Account, Cash Management, Trade & Supply Chain Finance, Capital Markets and Custody and gained market share. The Banks key focus has been
on providing differentiated, integrated product propositions to its clients across corporate, commercial banking, financial institutions, and government segment that has resulted in Axis Bank being the industry leader with a dominant share in BBPS, NEFT and IMPS .
As part of its Open customer centric approach, the Wholesale Bank has been at the forefront of bringing new digital products and services that help transform customer experiences. "NEO by Axis Bank", our umbrella digital initiative for transaction banking, continued to demonstrate strong product market fit, finding resonance with clients across APIs and partnerships. The Banks strong API product suite offers transaction banking APIs across cash management, trade finance & supply chain that allows corporates to integrate with Axis Bank directly from their ERPs. As of March 2024, the Bank witnessed 6X growth in transaction volumes and 4X growth in transaction throughput reflecting in higher CA balances and fees.
Over the past 2 years, Neo has consistently won market recognition on customer experience and innovation with some of the major awards being The Asset Triple A Awards for Baset API Project, Infosys Finacle Innovation Awards 2023, Dun & Bradstreet BFSI Fintech 2023 and ET BFSI Excellence Awards 2023.
During the fiscal 2024, the Banks domestic corporate loan book (gross of IBPC) grew by 10% YOY. The Banks focus segments such as the Mid Corporate and SME delivered higher growth of 22% and 17% respectively.
The Bank continues to focus on delivering higher relationship RaRoC, with focus on granularity and broadening its client base. The Banks strategy of diversifying its portfolio and credit through a sectoral approach remained consistent throughout the year, with a focus on identifying sector-specific opportunities and risks and growing accordingly. Approximately 88% of new sanctions in the corporate book were to companies rated ‘A-‘ or better. Presently, 89% of outstanding standard corporate book is to companies rated ‘A- and above.
The Bank remains focused on offering customized solutions for the unique banking requirements of its varied customers and has developed unique working models for its customers, creating distinctiveness for the Bank and sustained investor value in the long term.
Fintechs are redefining traditional banking by extending financial services to a broader section of the Indian population, including those who were previously underserved. Axis Bank has demonstrated a strong commitment in partnering with fintech firms and invested in technological innovations and customer-centric approaches for supporting start-ups including in the Fintech & E-commerce sector. The Bank has notably collaborated in areas from cash management and core banking solutions to structured Escrow & API customization with substantially increased transactions per second (TPS) & round- the-clock high volume settlements 366 days a year, equipping new-age players with a variety of capabilities. Additionally, the Bank facilitated direct rails with international payment gateways, enabling startups to accept global payments. The Banks comprehensive suite of banking API integrations are being leveraged by Fintechs and E-commerce players for bill collections, payments, trade and more, supporting customers across a wide payment spectrum. This diversity enhanced the banking experience by allowing users to transact using their preferred payment method. The Bank continues to be amongst the leading private sector banks in the Government Banking space in India. The solution-oriented approach along with the strong relationship management has helped us create a sustainable business franchise.
Overseas operations of the Bank are spread over 7 international offices with branches in Singapore, Dubai (at DIFC) & Gift City and representative offices in Dhaka, Dubai, Abu Dhabi, Sharjah. These branches offer non - INR corporate lending, trade finance, syndication, investment banking, liability businesses, FX remittances, derivative solutions in G7 currencies to companies with linkages to India by way of ownership and counterparties.
The branches in DIFC, Dubai & Singapore focus on coverage of MNCs, Investors and Financial Sponsors (FS) whose regional treasuries/headquarters are based in UAE & Singapore and have India as one of their investment destinations. The endeavour is to create solutions to cater to requirements of these clients across their business life cycle in India and provide seamless coverage to stich both ends together through the twin coverage model within the WBCG. The model works towards ensuring that we present the One Axis as a franchise to all the MNC and FS clients across these centres.
During the year, the Banks overseas branch in the DIFC, Dubai won the "Excellence in Finance Companies in Banking" Award presented at the FINEXT Awards & Conference in Dubai.
Small and Medium Enterprises (SME) Banking
The MSME (Micro, Small and Medium Enterprises) sector continues to be the focus segment for the Bank as it contributes to nearly 30% of Indias GDP, 44% of Indias exports and 45% of Indias workforce. The Banks Small Enterprises Group (SEG) and Medium Enterprises Group (MEG) which are among the high growth segments for the Bank, cater to MSME
requirements across the entire customer value chain, from loans to trade/forex to liabilities. The Bank also provides both enterprise banking solutions for the business and personal banking solutions for the business owners & employees.
In fiscal 2024, the Banks SME business which remains one of the most profitable segments with granular and well diversified customer base exhibited growth of 17% with market share expansion, while contributing significantly to Priority Sector Lending (PSL) agenda and the development of a robust liability portfolio. The SME book stood at 104,718 crores as of March 31, 2024 and constituted 11% to the Banks overall net advances.
The Bank has continuously strengthened its digital capability with loan processing on LOS (Loan Origination System) platform, moving maximum processing through digital capabilities, adopting STP on renewals thereby improving customer experience etc. During the year, the Bank launched "Neo for Business", a mobile-first transaction banking platform tailored for SMEs, that provides integrated journeys combining banking and beyond banking features towards helping the Bank become operational bank of choice for its SME customers. The Bank has witnessed strong customer adoption for "Neo for Business" with 60,000+ customers onboarded via the app in ~6 months since launch.
The asset quality in the SME segment remains stable as a result of its granular well diversified portfolio and continuous monitoring of exposure through usage of various Early Warning Systems. The net NPA in SME segment stood at 0.26% with provision coverage ratio of 72% as of March 31, 2024.
Wholesale Banking Products
The Bank has strengthened its proposition as a transaction Bank of choice across Current Account, Cash Management, Trade & Supply Chain Finance, Capital Markets and Custody and gained market share. The Banks focus has been on providing differentiated, integrated product propositions to our clients across corporate, commercial banking, financial institutions, and government segment.
As part of Wholesale Banking initiative, "NEO by Axis Bank" reflects the Banks commitment to building a leading digital Transaction Bank. This initiative encompasses a broad spectrum of best in class digital offerings, including APIs, corporate internet Banking, host to host integration, and strategic partnerships. The Bank has been on this journey for over 2 years, and its transaction banking thought leadership and consequent deep solutioning continued to see widespread adoption at an increasing pace, demonstrating a strong product-market fit.
The Bank has built solutions to cater to the full range of business customers based on their digital maturity. The Bank has not only built a wide suite of APIs for corporates to integrate their ERP solution easily to the Bank, it has also created the corporate developer portal for digitally savvy customers to integrate in a Do-It-Yourself fashion with the Bank.
Cash Management
The Bank offers comprehensive cash management solutions across all segments. Notable amongst the differentiated product propositions launched this year is "Liquidity Management Solution (LMS)". Using LMS, Axis Bank clients treasury function can automate accelerate cashflows, optimize and improve yields. The Bank has also implemented new payment hub for handling the fast-growing NEFT (National Electronic Funds Transfer) volumes of API banking customers thereby making them and us future ready. The Bank continues its leadership position in processing the highest number of NEFT transactions amongst all the banks & had a market share of 30% in fiscal 2024.
The Bank is progressively improving on its leadership position in Bharat Bill Payment System (BBPS) ecosystem and has been amongst the first bank to launch donation category in BBPS. The Bank continues its leadership position in terms of number of biller onboarding and highest number of transactions amongst private banks & has been leading the way for new category of billings like B2B and piloting new initiatives with NPCI, billers & fintech partners.
Trade and Supply Chain Finance
The Bank offers a complete suite of Trade and Supply Chain Finance products and solutions - for both domestic as well as international trade. These solutions are offered via various digital channels and through our branch network. Dedicated team of product specialists - in sales, product and operations, support clients across exports, imports, bank guarantees, working capital optimisation, liquidity & risk management solutions.
• International trade solutioning
The Bank continued to provide unique solutions to Indian exporters, exporting to difficult geographies, by confirming Letter of Credit (LCs) through enhanced structured partnerships with multilaterals and international banks. During the year, the Bank undertook the maiden LC confirmation under Exim Banks TAP program. The Bank commercialised
solutions for auto and oil exporter clients through robust partnership solutions. The Bank also enhanced trade capabilities at its Gift City branch by launching new products to facilitate international trade. In order to simplify regulatory procedures, the Bank provided solutions to export clients to merge their ERP data to reconcile with Export Data Processing and Monitoring System (EDPMS) data.
• Capturing infrastructure sector thrust
The Bank leveraged its existing trade capabilities and issued a maiden guarantee for clients of a government owned infrastructure financing bank. As infrastructure projects across India gained momentum, the Bank re-launched its "Express Guarantee" product for small and medium sized companies in need of an immediate guarantee. The Bank also partnered with NeSL to execute electronic Bank Guarantees (eBG) across client segments and is working with multiple Government and non-Government beneficiaries to commercialise eBG.
Additionally, the Bank is expanding the integrated supply chain solutions across the clients life cycle through multiple products that cater to specific segments supply chain requirements.
Current Account
The Banks focus on becoming the transaction bank of choice resulted in the current account balances growing 5% during the year. This financial year, the Bank has launched an end-to-end digital onboarding journey for sole proprietorship and individual clients. These clients can open the current account through self-assisted web-based KYC process with verification of digital documents (Aadhar and Udyam Aadhar) via API, which is followed by video KYC. This ensures instant account number generation and activation. This onboarding journey is launched in addition to the existing journeys using TAB, SMART Form and physical form.
During the year, the Bank also launched a customised banking proposition for the hospitality sector, while continuing the focus on digital current account proposition for merchants, newly incorporated customers and specific industry-based propositions for pharma, textile and agriculture.
Treasury & Markets
The Banks Treasury & Markets function comprises of Asset Liability Management (ALM), Forex Trading group (including Currency Derivatives & Bullion), Interest Rate Trading (IRT) (including Rupee Derivatives) & Primary Dealership (PD), Non SLR Trading (including Equity), Debt Capital Markets - DCM (Domestic DCM &International DCM), Treasury Sales, Loan Syndication, and Treasury Technology & Governance team.
The Banks ALM group manages the regulatory requirements of Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR) and Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NFSR). The group also manages the liquidity, interest rate and currency risks in the Banks portfolio, under the guidance of the Asset Liability Committee (ALCO) of the Bank.
The Banks Forex Trading Group is a major participant in the foreign exchange and derivatives market and undertakes proprietary trading and market making in forex and derivatives products.
The Interest Rate Trading (IRT) desk plays an important role of market making and trading in G-Sec, OIS & other interest rate products. The Bank is primary dealer of Government securities. PD desk ensures mandated bidding commitments, success ratio & turnover ratio for T-bill auctions / G Sec are achieved for the year. The Corporate Bond & Equity Trading desk undertakes primary and secondary market investments in corporate bonds, commercial papers, certificate of deposits, and equity instruments.
The Bank remains a dominant player in the Debt Capital Market (DCM) segment. The Bank was ranked 3rd in the calendar year 2023 (as per Bloomberg league table) after maintaining its leadership position for 16 consecutive years, as the number one arranger until calendar year 2022 for rupee denominated bonds. The Bank also has a growing International Debt Capital Markets franchise with mandates from leading corporate issuers for their international bond issuances. The desk has demonstrated a track record of arranging several ESG (Environmental, Social & Governance) compliant issuances.
Treasury Sales team works closely with coverage team to provide customised risk management and hedging solutions to our diverse clients. The solutions provided are across a range of products including FX, Derivatives, Fixed Income and Commodities, and the breadth of customers we serve allows us to make competitive prices across these wide-ranging products. The Banks key strengths in complex and structured risk management solutions, hedging advisory and execution skills makes it rank among the leading treasury solutions provider in the country.
The Banks Loan Syndication desk is responsible for arranging loan facilities for corporate clients on underwriting/ arranger/ best-efforts basis while also undertaking secondary sale and purchase of loans. The desk, being active in both domestic and international loan markets, plays an integral role in balancing the risks and returns on the Banks corporate loan book.
The Treasury Technology & Governance (TTG) team oversees the Treasury technology implementation and ensures appropriate governance framework is in place before new products are rolled out to customers / undertaken in Interbank market.
The Bank is making steady progress in migrating to its fully integrated state-of-art Treasury system as part of its Technology upgrade. Phase 1 of the migration was successfully completed in fiscal 2024 with Phase 2 expected to go live in fiscal 2025.
Distinctiveness - "SPARSH"
Sparsh, the Banks Customer Obsession program which aims to Delight Customers and fulfill their dreams through Smart Banking everyday, continues to be a Bank-wide priority as an area of distinctiveness; now embedded across all our branches, all customer touchpoints & all its 100,400+ employees.
Sparsh is designed to ‘Listen to the Banks Customers, get deeper understanding of their needs, likes & dislikes and ensure that its Customer Credo of ‘Delighting Customers and Fulfilling their dreams through Smart Banking, Everyday, remains a core priority for all customer facing colleagues. To ensure that the entire Bank delivers delight, the Bank has adopted STAR behaviours of Start by Listening, Take Charge, Always keep promises and Raise the bar, which are to be ensured across all customer interactions. These customer centric behaviours are driven through rituals such as Sparsh Pulsate, a daily morning huddle which runs across all large distribution channels like Branches, SME Teams, Axis Phone Centres and Operations set up. This platform has evolved to be the foremost learning and customer-focused platform for the franchise and various distribution channels.
The Bank has embraced ‘Transparency as one of the key pillars to build customer delight. Bank has various capabilities to empower customers and deliver transparency of charges throughout the product lifecycle. Empowering eligible customers to contest and seek instant charge reversal through digital channels and proactive nudge to maintain average balance to avoid changes with real time simulator are two such industry first initiatives which shows that the Bank thinks "customer first".
The Bank continues to strengthen and build more granular measurements of the critical metrics which captures customer voices, like NPS (Net Promoter Scores), complaints, social media sentiments and various operational process efficiency metrics, especially turnaround times. NPS (Net Promoter Scores) across journeys has improved as the Bank continues to listen and act on the voice of its customers. The Bank has made substantial progress in the first 2 years, with NPS for the retail bank increasing from a baseline of 100 to 145 and even more for most products and businesses. NPS is now an important lead indicator for the Bank, to invest in the right customer impacting areas.
Delighting every day is a promise of the Bank to its customers, both internal & external. Through various institutional capabilities, the Bank is building a smarter and productive environment.
• "Adi" (Axis Deep Intelligence), is a generative AI (Artificial Intelligence) chatbot, which enables the Branch Banking employees to get instant answers to their queries on product and process. Host of other institutional capabilities under Sparsh are also now live which are aimed to enable and empower the employees and customers with instant help.
• Kaleidoscope is an innovative tech stack which brings near-real time chronological view of all customer footprints across multiple channels, products and journeys including incomplete or broken journeys. This is helping in providing first contact resolution to the customers.
• ‘My Requests page is a unified service request tracker available on Internet Banking and Mobile Banking. It allows customers to know committed turnaround time, status of request and provides guidance for any incomplete request. This feature is fully unified displaying the status of all requests initiated from any channel for any product, thereby increasing transparency on request status.
The Bank has set up an Executive Board, Sparsh Board, which meets twice in a quarter to review the progress of this program. It is chaired by Executive Director, Banking Operations & Transformation and comprises of 11 senior leaders from different verticals of the Bank. Sparsh board is driving the rigor by closely monitoring the voice of customers through complaints, NPS surveys, turnaround times of various customer onboarding or servicing journeys, social media sentiments etc. Tentpole ideas which can elevate customer experience are presented and brainstormed in this forum.
Sparsh is about prioritizing ‘the customer, ensuring that customer is the center of all that the Bank designs and creates. The impact is visible and there is a lot more that will come through as the Bank keeps building on it, as part of its multi-year transformation journey.
Business Intelligence Unit
The Banks Business Intelligence Unit (BIU) team has the mandate to create data assets and monetize them via various business decisions and strategies. The team has numerous success stories in the areas of risk management, marketing, product innovation, customer experience and operational optimization. These use cases span across multiple business areas of the Bank including retail lending, credit cards, retail deposits, wholesale banking products, commercial banking group, operations, etc.
There are over 650 highly capable members in the team in various techno-functional roles with expertise in data engineering, data science and quantitative approaches.
The Bank has invested in new age data science and engineering platforms - Big Data Lake, Micro Services-based architecture, and Analytical Work Bench to deliver value in traditional/non-traditional use cases. There has been upward trend in the adoption rate of these platforms. The Banks focus on Artificial Intelligence (AI) & Machine Learning (ML) along with traditional analytics has helped internal stakeholders to make data driven business decisions.
The Bank has built a modern data stack, with 1,000+ live use cases. Over 30 crore records are ingested leveraging enterprise class tools to drive scalability and flexibility for the business. On data governance and quality, the bank is one of the first to implement Informatica MDM in the country. MDM is a customer master data for managing multiple customer IDs from multiple systems in one place. The Bank is using data science to enable database programs and partnership growth in lending, with significant progress in qualifying customers for cross-sell programs and partnerships.
During the year, the BIU team focused on 3 key distinctive initiatives - Personalization, Digital Public Infrastructure & Partnerships and Modern Data & Tech infrastructure. The team has scaled up personalization significantly this year to cover majority of customer marketing & engagement, done by the Bank. The Bank now has 15,000+ live nudge variants. These Hyper-personalised nudges are sent to customer across customers digital journey, cross-sell & regulatory compliance, resulting in significant increase in Credit Card-Insta loan booking by ~60%, Personal Loan sourcing by 100%, Term Deposits sourcing by ~60%, and Saving Account New to Bank (NTB) acquisition by 37%. The nudge framework is not limited to business; it extends to services like Re-KYC and other customer communications.
Under the purview of Personalization, the Bank is building inhouse capability of scientifically pricing its products with the objective of delivering enhanced customer experience. The Bank continued its focus on leveraging alternate data via digital public infra to fuel lending growth, the Bank deepened its engagement with existing partners, added new partnerships and conducted joint data room exercise with scientific customer qualification for loans and credit card.
BIU has also played active role in ensuring successful integration of Citi with Axis. This included development of timely and accurate business and regulatory reporting across two different systems. The BIU worked extensively on identifying & monetizing synergies between Axis & Citi across different business areas supporting identification and implementation of 70 synergy initiatives across cross-sell, deepening, sales productivity and cost rationalization. The team is also supporting various activities to ensure a seamless LD2 transition for all its valued Citi customers.
The Bank has seen a significant increase in qualifying existing customers for cross-sell programs, with a notable rise in the number of Known to Bank (KTB) customers and partnerships since fiscal 2022. Additionally, theres a focus on enhancing the number of incremental offers per customer, further driving the banks competitive advantage. The bank has qualified more than half of its customer base for credit offer with on an average 2.8 offers per customer. Through its database program there is 1.5x disbursements/lines this year vis a vis last year. These programs use robust analytical toolkits base upon risk & income assessment. These offers are presented to its customers through omni channels such as mobile app, internet banking, branches, WhatsApp Banking, Axis Virtual Center, etc.
Information Technology and Cyber Security
The Banks Information Technology (IT) strategy remains guided by the Banks GPS strategy and its aspiration of becoming a preferred financial services provider and best tech and digital bank that is committed to technological excellence and innovation with secure and resilient banking system. The Bank aspires to build industry capabilities in digital and data, enhance operational efficiency and empower customers through innovation and adoption of emerging technologies such as Generative artificial intelligence (GenAI) and cloud. The Bank continues to focus on the 6 key imperatives that include End- to-end customer journey digitization, accelerating delivery, modernizing the core to deliver profitable growth, fix the basics to build a sustainable franchise, talent & culture, and risk & governance.
The Bank has been focusing heavily on expanding its technology capabilities. Over the past 3 years, IT operational spends have gone up by 150% while the IT team size has increased by 100%. The Bank manages all banking applications through a talented 2,000+ member tech team with strong domain capabilities in banking, treasury, channels, payments, and collections, along with technical expertise.
During the year, the IT department continued execution of more than 30 key initiatives to facilitate its journey towards driving sustainable growth, improving customer experience with the help of digital banking, leveraging payments business capability, sustained focus on analytics, and providing self-assisted capability to customers. Over the past year, IT team has successfully closed key initiatives across varied areas such as core upgrades, employee enablement, and digital-first offerings.
The Bank has launched the mobile App ‘Open by Axis Bank which is a one-stop solution for all the digital banking initiatives. It has 250+ features and handles over 67% of all service requests by volumes delivering personalized, intuitive, and hassle- free digital banking experience. Axis mobile app has been developed focusing on customer interactions, product design and process innovations at its very core, and was launched in October 2023. Axis Bank is the first private sector bank to launch ‘One View Multi-bank Aggregator on Axis mobile app. The Bank retained strong position in digital banking with the Axis mobile app among the worlds top rated mobile banking app on Google Play store and iOS App store with a rating of 4.8 and 14 million monthly active users.
Axis Retail Internet Banking platform is now more accessible with multilingual feature; the critical modules are now available in Hindi, Marathi, Bengali and English. Also, ‘Axis Bank Support website is now available in 9 languages. The Bank has 30 digital services on Branch of the Future (BOTF) channel with new features such as change in EMI cycle, change in EMI repayment account, and loan account statement download added in the current fiscal year. The Banks WhatsApp banking channel reached 4 million+ customers, conducted 50+ campaigns and 30 million+ communications, and added FD booking and Loan services as its latest offerings.
As a part of its Modernize the Core imperative, the Bank has upgraded its payment platform and is now the market leader in National Electronic Funds Transfer (NEFT) outward transactions since April 2023. The Bank has improved its Unified Payments Interface (UPI) offerings by adding UPI on Credit Card, UPI Lite, Foreign Outward Remittance, and UPI interoperability with Digital Rupee to its UPI suite. The Bank also has one of the lowest UPI technical decline level among the peer banks.
The Bank has also initiated the adoption of GenAI capabilities into its regular operations. For example, Conversational Interface, Content Summarization, Data Analytics & Visualization, Multi-modal Content Generation, Knowledge Retrieval, Co-pilot use cases. It is the first Indian bank to roll out Microsoft Gen AI Co-pilot. Additionally, the Bank continues to build capabilities in emerging technologies of Artificial Intelligence (AI), Machine Learning (ML), Automation, and Data Analytics. The Bank has 3,500+ RPA bots in action with a focus on retail banking operation related activities and 1,480+ automated processes, and is targeting best in class efficiency for RPA, Voice, and IOCR. During the year, the Bank continued to introduce, and scale new products driven by its zero-based redesign philosophy. The redesigned customer centric journeys enable minimum to no data entry with automated underwriting.
The Bank remains committed to its open ecosystem proposition with its focused API strategy and has adopted ‘Next Gen integration by deploying more than 410 APIs on its Developer portal and 3,000+ registered users across 460+ external gateway partners. The Bank continues to roll out new APIs to enable digital customer journeys and partner on-boarding leading to reduced time to market.
The Bank continued to focus on technology upgrades across key areas such as Treasury and Retail Assets. The Bank has launched Murex, an integrated Treasury Management System with better pricing, analytics and reporting capabilities and which will reduce the number of Treasury Applications from 6 to 2. On the Retail Assets front, the Bank has been developing omni-channel digital journeys using Salesforce platform capabilities across retail assets through in-house development.
The Bank is the first amongst its peers to create 3 Cloud landing zones (AWS, Azure and GCP) to support its multi-cloud strategy and has an architectural Cloud-first, Cloud-native approach. The rapid pace of cloud adoption, driven by a dedicated Cloud COE (Centre of Excellence), has helped the Bank to drive business innovation at a faster pace. The Bank has 140+ applications on Cloud and has been recognized as the 1st Indian Bank to be ISO certified for AWS and Azure cloud security. The Bank continued its journey towards next gen initiatives such as hyper automation using Infra as a Code capabilities and enhancing application observability through Cloud based SRE capabilities.
The Bank has two primary data centres located in Mumbai (co-located) and Bengaluru (owned). Both data centres have n+1
redundant architecture for power and cooling distribution. Business applications are strategically spread between the two data centres for active setup at one DC and resiliency at other DC. Both data centres are in different seismic zones and are connected through a redundant wide-area network which is connected to all branches and office locations. Additionally, the Bank has set up a refreshed Near DR (Disaster Recovery) for Critical Apps with 100% DR Site Resiliency for Critical Applications. The Bank regularly conducts disaster recovery drills for critical applications to ensure continuity readiness in the event of disaster. Bank has enhanced resiliency of critical applications with automation tools that provide real-time visibility on DR readiness and DR operations.
The RBIs Digital Currency initiative is a significant step towards transforming Indias banking landscape and promoting a more inclusive and efficient financial system. As an organisation that takes pride in staying ahead of the curve, the Bank has embraced this cutting-edge technology to demonstrate commitment to this agenda and have already launched the pilot program. So far, ~6.5 lakhs customers have started using the Banks Digital Rupee app and usage continues to increase.
The Bank remains committed to the highest standards of data security and privacy and continues to invest to enhance its capabilities. The Bank follows a holistic cyber security program with a comprehensive Cyber Security Policy and Standards based on industry best practices in compliance with regulatory guidelines. The Bank has deployed its cyber security structure and framework based on National Institute of Standards and Technology (NIST) and ISO27001 Standards. The Banks cyber security framework is built and operated around five fundamental areas including Identify, Protect, Detect, Respond and Recover. The Bank is compliant to ISO27001 Information Security Management System (ISMS), ISO27017 Cloud Security Standards and The Payment Card Industry Data Security standards (PCIDSS), and the Bank has recently acquired ISO27034 Business Application Security Certification for its Software development and management domain, this is a first in the Indian Banking sector and demonstrates an enhanced cyber security resilience and security controls on the Banks IT and application assets.
The Bank has a 24x7 Security Operations Centre and Cyber Security Operations System. 100% of the digital products of the Bank are under Dark Net / Deep Web monitoring. The Bank has a BitSight Rating of 810 out of 900 (with 820 as maximum possible score) indicating a well-controlled internet facing security posture. The Banks current BitSight score is higher than 90% of the Banking and Finance entities tracked by BitSight. The Bank is deploying a zero-trust architecture internally, adding security technology and process controls. The Bank has conducted exclusive workshops on cyber security for 1,500+ mid and senior management employees.
The Bank has deployed Cyber Security controls to protect its information assets from unauthorized access, hacking attempts, data loss, external cyber-attacks, etc., and has implemented various detection and monitoring technologies, to proactively detect and respond to any cyber threats. Some of the controls are as follows:
o Multifactor authentication has been enabled for users on all cloud platforms.
o Enhanced WFH Security controls have been enabled with additional security against malware & websites with bad reputation.
o Secure and isolated environment for Remote access to critical systems, to prevent sensitive data leak or unauthorized access.
o Advanced End-Point controls and Data Leakage Prevention (DLP) control to detect and prevent endpoints being target of cyber-attacks.
o Spam and Phishing emails protection have been enabled to protect against email-based cyber-attacks that were rampant during the pandemic.
o 24x7 security monitoring along with usage of Cyber Security Threat Intelligence to detect malicious underground activities against the Bank.
o In addition, to the above controls; Bank has also enabled Enhanced monitoring for Remote users to detect and prevent; any unauthorized and unusual remote access, user access to Bank systems from unusual geographies, concurrent user access from different locations, etc. and data Leakage monitoring for web channel, email channel and end Points.
Information & Cyber Security governance framework is in place at a strategic level through the Board, Risk Management Committee, Information Technology & Digital Strategy Committee and at an executive level through Information System Security Committee which oversees the Banks Information and Cyber Security initiatives so that those controls commensurate with the risks and threats applicable to the Bank and its information assets.
Risk
The risk management objective of the Bank is to ensure that the Bank operates in a risk - sensitive manner within the parameters of the Board approved Risk Appetite Statement and the concerns of Risk Department, while balancing the tradeoff between risk and return. In order to achieve this objective, the Bank has ensured at the outset the following enablers
• Robust risk governance from the top
• An independent risk management function
• Board approved risk appetite
• Focus on risk culture
Risk Governance
The Board is the Apex Governance body on all matters of risk management. The Board of Directors exercises its oversight over risk management both directly and through its Committees, namely the Risk Management Committee, the Audit Committee of the Board, the Special Committee on Large Value Frauds and the IT & Digital Strategy Committee. While the Board reviews risk management matters on a quarterly basis, including approval of risk policies, risk profile, stress testing, risk policies, key & emerging risks etc., the Risk Management Committees oversees these matters in greater detail and depth and approves the Risk Appetite Statement of the Bank.
Executive Risk committees are constituted to look at specific areas of risk and are mandated by the Risk Management Committee of the Bank. Till fiscal year 2023 these were: Credit Risk Management Committee (CRMC), Asset Liability Management Committee (ALCO), Operational Risk Management Committee (ORMC), Information Systems Security Committee (ISSC), Central Outsourcing Committee (COC), BCP & Crisis Management Committee (BCPMC), Apex Committee and Subsidiary Management Committee (SMC). In fiscal year 2024, the Bank established an Enterprise & Group Risk Management Committee (EGRMC) to oversee risk management from a group risk perspective. The Risk Management Committee of the Bank exercises oversight on these committees through review of their minutes.
Independent risk management function
An independent risk management function offers assurance to the Board that risks are being taken and managed in line with the overall risk appetite of the Bank and the risk management policies of the Bank approved by the Risk Management Committee and the Board.
In order to ensure independence, the following enablers are in place
• Risk function is headed by a Chief Risk Officer who is appointed by the Board of Directors and who reports to the Risk Management Committee with additional reporting to the MD & CEO of the Bank
• The Chief Risk Officer does not have any business targets nor does this officer have any other role like operations, technology etc.
• The Chief Risk Officer has direct access to the Risk Management Committee of the Board and meets the committee one on one on a quarterly basis without any other officers of the Bank being present.
• The Risk function under the Chief Risk Officer is part of various decision making bodies e.g. Risk function is a permanent invitee to all credit sanctioning committees in the wholesale banking space, Risk function convenes and conducts meetings of executive risk committees etc.
• The Risk function is well staffed in terms of people and has independent access to data needed to support its working.
The Risk Department, while discharging its role, first lays down risk policies which are then approved by the Board of Directors, and then monitors the risk profile of the Bank across various components of risk in line with these policies and also informs and escalates matters of concern to the appropriate levels of management.
Risk Appetite
The overall risk appetite and philosophy of the Bank is approved by the Risk Management Committee of the Bank.
The Risk Appetite Statement and the framework thereof provides guidance to the management on the desired level of risk for various types of risks in the long term and helps steer critical portfolio decisions.
The Risk Appetite is set at the Bank level and is cascaded into the business units for driving decisions at an operational level. It is monitored by the Risk Department which reports on the adherence thereto to the senior management and also to the Risk Management Committee.
Risk Culture
A robust operational risk and compliance culture is the cornerstone for risk management in any institution. In the Bank, Risk Department along with Compliance Department has put in place an action plan to strengthen the risk and compliance culture. This includes various initiatives such as
• Training and awareness programs
• Strengthening staff accountability framework
• Clarity on roles and responsibilities of the front line staff
• Tone from the top through communication from the MD & CEO
Risk Architecture
The risk architecture is composed, for every type of risk, of elements of
• Governance with executive risk committee oversight
• Risk policies to provide guidance
• Tools for measuring risk level
• Monitoring of risk profile
• Reporting for actioning
A summary of these facets of the key risks is provided here:
| Risk type | Definition |
Approach to risk management |
| Credit Risk | Credit risk is the risk of financial loss if a customer, borrower, issuer of securities that the Bank holds, or any other counterparty fails to meet its contractual obligations. | The goal of credit risk management is to maintain asset quality and concentrations at individual exposures as well as at the portfolio level. |
| Internal rating forms the core of the risk management process for wholesale lending businesses with internal ratings determining the acceptability of risk, maximum exposure ceiling, sanctioning authority, pricing decisions and review frequency. For the retail portfolio including small businesses and small agriculture borrowers, the Bank uses different product-specific scorecards. Credit models used for risk estimation are assessed for their discriminatory power, calibration accuracy and stability independently by a validation team. | ||
| Credit risk arises from all transactions that give rise to actual, contingent, or potential claims against any counterparty, customer, borrower or obligor. | ||
| Both credit and market risk expertise are combined to manage risks arising out of traded credit products such as bonds and market related off-balance sheet transactions. | ||
| Market risk | Market risk is the risk of losses in on and off-balance sheet positions arising from the movements in market price as well as the volatilities of those changes, which may impact the Banks earnings and capital. The risk may pertain to interest rate related instruments (interest rate risk), equities (equity price risk) and foreign exchange rate risk (currency risk). Market risk for the Bank emanates from its trading and investment activities, which are undertaken both for the customers and on a proprietary basis. | The Bank adopts a comprehensive approach to market risk management for its banking book as well as its trading book for both its domestic and overseas operations. The market risk management framework of the Bank covers inputs regarding the extent of market risk exposures, the performance of portfolios visa-vis the market risk limits and comparable benchmarks which provide guidance to the business in optimizing the risk-adjusted rate of return of the Banks trading and investment portfolio. |
| Market risk management is guided by clearly laid down policies, guidelines, processes and systems for the identification, measurement, monitoring and reporting of exposures against various risk limits set in accordance with the risk appetite of the Bank. Risk Department independently monitors the Banks investment and trading portfolio in terms of risk limits stipulated in the Market Risk Management Policy and board approved Market Risk Appetite and reports deviations, if any, to the appropriate authorities as laid down in the policy and in the Risk Appetite Statement. The Bank utilises both statistical as well as nonstatistical measures for the market risk management of its trading and investment portfolios. The statistical measures include Value at Risk (VaR), stress tests, back tests and scenario analysis while position limits, marked-to-market (MTM), stoploss limits, trigger limits, gaps and sensitivities (duration, PVBP, option greeks) are used as non-statistical measures of market risk management. | ||
| The Bank follows a historical simulation approach to calculate Value at Risk (VaR) with a 99% confidence level for a one-day holding period in a time horizon of 250 days. VaR models for different portfolios are back tested on an ongoing basis and the results are used to maintain and improve the efficacy of the model. VaR measurements are supplemented with a series of stress tests and sensitivity analyses as per a well laid out stress testing framework. | ||
| Liquidity risk | Liquidity is a banks capacity to fund increase in assets and meet both expected and unexpected cash and collateral obligations at a reasonable cost and without incurring unacceptable losses. Liquidity risk is the inability of a bank to meet such obligations as they become due, without adversely affecting the banks financial condition. | The Asset Liability Management (ALM) Policy of the Bank stipulates a broad framework for liquidity risk management to ensure that the Bank is in a position to meet its liquidity obligations as well as to withstand a period of liquidity stress from bank-level factors, market-wide factors or a combination of both. The ALM policy captures the liquidity risk appetite of the Bank and related governance structures as defined in the Risk Appetite Statement. The ALM policy is supplemented by other liquidity policies relating to intraday liquidity, stress testing, contingency funding plan and liquidity policies for each of the overseas branches. |
| The liquidity profile of the Bank is monitored for both domestic as well as overseas operations on a static as well as on a dynamic basis by using the gap analysis technique supplemented by monitoring of key liquidity ratios and conduct of liquidity stress tests periodically. Periodical liquidity positions and liquidity stress results are reviewed by the Banks ALCO and the Risk Management Committee of the Board. | ||
| The Bank has integrated liquidity risk management guidelines issued by RBI pursuant to the Basel III framework on liquidity standards in its asset liability management framework. These include the intraday liquidity management and the Liquidity Coverage Ratio (LCR). The Bank maintains LCR /NSFR in accordance with the RBI guidelines and the defined risk appetite of the Bank. | ||
| Operational risk | Operational risks may emanate from inadequate and/or missing controls in internal processes, people and systems or from external events or a combination of all the four. | Core operational risk |
| The Bank has in place an Operational Risk Management (ORM) Policy to manage the operational risk in an effective, efficient and proactive manner. The policy aims at assessing and measuring the magnitude of risks, monitoring and mitigating them through a well-defined framework and governance structure. | ||
| Operational risk manifests in the form of | The Bank has set up a comprehensive Operational Risk Measurement System for documenting, assessing, and periodic monitoring of various risks and controls linked to various processes across all business lines | |
| • Core process risk | ||
| • Change management risk | Change management risk |
|
| • Outsourcing risk | All new products and processes, as well as changes in existing products and processes are subjected to risk evaluation by the Operational Risk team. The overall responsibility of new products is vested with the Risk Department through the Banks Product Management Committee and Change Management Committee. | |
| • Continuity risk | ||
| • Information & cyber security risk | ||
Outsourcing risk |
||
| Outsourcing arrangements are examined and approved by the Banks Outsourcing Committee after due recommendations from the Operational Risk team. | ||
Business continuity risk |
||
| The Business Continuity Planning Management Committee (BCPMC) exercises oversight on the implementation of the approved Business Continuity Plan (BCP) framework which has been put in place to ensure continuity of service to its large customer base. The effectiveness of the approved Business Continuity Plan (BCP) framework is tested for all identified critical internal activities to ensure readiness to meet various contingency scenarios. The learning from the BCP exercises are used as inputs to further refine the framework. With effective Business Continuity Plan in place, the Bank has effectively managed to run its operations by adapting to various continuity / mitigation plans. | ||
Information security risk |
||
| The Bank pursues a holistic Information and cyber security program with a comprehensive Information Security policy, Cyber Security policy and standards based on industry best practices with compliance to regulatory guidelines. These policies are aligned with the regulatory directives on Information and Cyber security and with global best practices like NIST, ISO27001:2013, PCI DSS etc. | ||
| The governance framework is in place at executive level with Information System Security Committee constituting key business functions meeting at least once in a quarter to assess the threat landscape and validate the controls enforced in the Bank commensurate with the cyber risks. | ||
| The Bank has invested in strong technical and administrative controls to proactively prevent, detect and contain and respond any suspicious activity. Bank is compliant to ISO27001 standard and PCI DSS standard. The Bank conducts various assessment to identify and remediate risks before any application and/or IT infrastructure component is deployed. These assessments include Application security, vulnerability assessment, penetration testing, security architecture review data security assessment etc. Bank also has adopted defense in depth methodology to protect its valuable assets from intrusion by malicious actors. The Bank has 24x7 Security Operation Center (SOC) to keep vigil on its digital assets and coordinates with RBI, Indian Computer Emergency Response Team (CERT- IN), National Critical Information Infrastructure Protection Centre (NCIIPC), National Payments Corporation Of India (NPCI) etc. for implementation of their recommendation to strengthen its defence against cyber-attacks. | ||
| The Information System Security Committee of the Bank provides directions for mitigating operational risk in the information systems. Over the year, the Bank has focused on strengthening the operational and information security risk frameworks by implementing several initiatives. |
Strategic initiatives undertaken in fiscal 2024
The Bank has invested in strengthening the risk infrastructure across multiple dimensions.
During fiscal 2024, the Risk Department enhanced its coverage of risks by strengthening its group risk management framework. This has culminated in the constitution of the EGRMC which is mandated by the Risk Management Committee to have oversight on matters of group risk. The Department also expanded its scope of model risk by enhancing the models covered beyond credit risk models only.
In terms of control environment, the Department strengthened controls around digital banking as well as embarked on more robust technology environment for dealing room risk management.
The Department also enhanced its focus on actioning around operational risks leading to a reduction in the level of critical and persistent operational risks.
Finally, Risk Department helmed the operational risk and compliance culture initiatives and is tracking the milestones therein which would, over time, lead to a robust risk lens being embedded in business.
Risk Department also worked on four areas of distinctiveness
• Enhancing the climate and ESG risk conversations in the Bank
• Training and certification for cyber security
• Models in the retail lending space for credit - led underwriting
• Models and toolkits for rural lending
The Bank also continued to focus on actioning around its operational risks and put in place timebound plans to address the top critical risks facing the Bank. A digital risk framework was also put in place and continually enhanced to enable the Bank to buildout its digital strategy in a risk - sensitive manner.
The Risk team remains focused on supporting the Bank in implementing its GPS strategy in a risk - sensitive manner. To that end, the team has identified a new critical initiative around digital banking and will continue to enhance the other four existing initiatives around Bharat Banking, cyber security, universal underwriting and risk & compliance culture. Thesewill contribute to a credit - led growth thrust in retail and rural space with a cyber-secure digital backbone. Successful implementation of these initiatives will help the Bank to achieve its GPS objectives in a sustainable manner.
Subsidiary Governance
The Bank oversees its subsidiaries to ensure adherence to corporate governance principles and is committed towards continuously improving internal controls and overseeing its subsidiaries as a financial conglomerate (FC).
To ensure the alignment of governance practices at a Group (Axis Bank and its subsidiaries) level and to positively engage within the Group, the Bank has established a Subsidiary Governance Committee (SGC). The Bank undertakes several initiatives to strengthen the governance framework under the supervision of the Subsidiary Governance Committee.
The Governance Framework also focuses on aligning key functions within the Group, such as Risk, Compliance, Audit, Human Resources, Finance, Information Technology, Cyber Security, Legal, Corporate Communication, Marketing, and Secretarial practices.
The Subsidiary Governance Committee also helps in implementing the "One Axis" theme by sharing uniform practices and building synergies between Group entities.
Compliance
Identification, assessment, and management of compliance risks and ensuring timely and comprehensive compliance to regulatory requirements on an ongoing basis is an integral part of basic responsibilities of every employee, stakeholder, and functions within the Bank. The Board and senior management emphasise zero tolerance for non-compliance to regulatory requirements on an ongoing basis through well-articulated Board approved policies and standard operating process (SOPs) for adherence by every employee in the Bank. Based on the mandate from the Board, compliance and risk culture related metrics are an important part of the performance appraisal of the whole-time directors & senior management, so as to help build and sustain a strong culture of compliance across the Bank.
While Compliance department spearheads all the requirements of regulatory compliance through a set of senior and experienced officials trained in the matters of compliance, it is well understood by every stakeholder within the Bank that responsibility of ensuring regulatory compliance is owned and shared by every individual and unit, for their respective areas, as part of first line of defence.
Important areas of focus of the senior management with respect to compliance risks, in both known hotspots, as well as areas of potential compliance risks, which are also monitored by the regulator very closely, include onboarding of customers, monitoring of transactions in accounts of customers, proactive measures to sensitize customers to avoid being defrauded by fraudsters, risks emanating from outsourcing of activities, cyber security, ensuring fairness to customers and effective & timely handling of customer grievances, amongst others. The management committee monitors these areas along with the executive committee members on a regular basis. These are also discussed by the Group Chief Compliance Officer with the management committee members at regular intervals.
In the pursuit of strengthening the first line of defense to ensure robust regulatory compliance, the Bank has made significant changes in the framework of Compliance & Risk Officers (CAROs), who work with every management committee member to proactively manage compliance risks under those functions. While the roles & responsibilities of CAROs have been aligned with the expectations from the Board and the regulator, the CAROs have also been empowered through a set of change in their reporting and performance assessment process and metrics, for them to highlight any gaps or non-compliance independently to the management committee member, for a timely remediation.
The other important pillars for the Bank to ensure robust regulatory compliance continue to be the frameworks for Root Cause Analysis (RCA), accountability & consequent management, self-monitoring & certification, compliance testing, customer grievance redressal, management of outsourced activities and automation of processes wherever feasible, to eliminate operational errors or mistakes.
The Bank has also made significant changes in its management of compliance risks across the Group through implementation of group governance policy. All the heads of compliance functions in subsidiaries across the Group now have a dotted line reporting to the Group Chief Compliance Officer, who oversees the status of regulatory compliance across the Group through laid down process of reporting by subsidiaries and monitoring of the same on an ongoing basis.
Internal Audit
The Banks Internal Audit function provides an independent view to its Board of Directors and Senior Management on the quality and efficacy of the internal controls, risk management systems, governance systems and processes in place on an on-going basis. This is provided to primarily ensure that the business and non-business functions are following both internal and regulatory guidelines.
In line with the RBIs guidelines on Risk Based Internal Audit (RBIA), the Bank has adopted a risk based internal audit policy. The Risk Based Internal Audit policy has been designed factoring regulatory guidelines and international best practices. The policy has a well-defined architecture for conducting Risk Based Internal Audit which articulates the audit strategy in terms of a concerted focus on strategic and emerging business risks. These inputs form a key step in the identification of the audit universe for the audit planning exercise. The audit frequencies are in congruence with the risk profile of each unit to be audited. The scope of RBIA includes examining the adequacy and effectiveness of internal control systems, external compliances, and evaluating the risk residing at the audit entities. Further to augment the internal audit function, concurrent audit, off-site audit, and thematic & snap audit reviews have been integrated into the internal audit process to make the function more robust. The Audit function recommends improvements in operational processes, design elements, policies, as part of audit report recommendations.
Advanced and emerging technologies as Artificial Intelligence, Robotic Process Automation are deployed for providing enhanced efficiency and effectiveness while performing audits. Automated tests have been developed across various audits i.e., Retail, Wholesale, Treasury, Operations units, Thematic audits, Information Security audit, Revenue audit and Concurrent audit to independently evaluate the adequacy and effectiveness of internal controls on an ongoing basis and proactively recommend enhancements thereof. The Internal Audit function has an effective mix of resources with technology and functional skill sets for effectively conducting technology driven audits. The Audit function is continuously enhancing the skill sets of the audit resources towards technology driven audits, for making the Internal Audit Function agile and responsive towards the emerging and strategic risks.
Internal Audit framework for subsidiaries has been further strengthened under the Group governance framework by having structured engagement, group audit policy alignment, audit oversight, monitoring of key KRIs and conducting thematic audits.
The Internal Audit function of the Bank operates independently under the supervision of the Audit Committee of the Board, that reviews the efficacy and performance of the internal audit function, effectiveness of the internal controls laid down by the Bank and compliance with internal and regulatory guidelines and provide guidance and directions.
Corporate Social Responsibility (CSR) & Sustainability CSR
The Banks CSR initiatives aim to bring about a meaningful socio-economic impact in the lives of the deprived and vulnerable communities across the country. Since inception, the Bank has strived to play an active role in building a resilient society and an equitable and inclusive Indian economy. The Banks CSR activities are guided by the CSR Committee of the Board and are in line with its CSR Policy, covering a gamut of themes including sustainable livelihoods, education, financial inclusion, conservation and protection of the environment, as well as relief- and need-based interventions. The Banks CSR efforts consciously strive to reach the most marginalized and scaled its interventions in Indias Aspirational Districts as well as the North-east region. The Banks CSR Policy, governance and oversight, and project implementation continue to be in accordance with the Section 135 of the Companies Act 2013 and all rules made there under.
The Banks CSR interventions continue to be delivered directly, through credible implementation partners, and the CSR arm of the Bank viz. Axis Bank Foundation.
Axis Bank Foundation was established in 2006 as a Trust to give strategic direction to the Banks CSR aspirations. Since 2012, the Foundations activities are focused on the theme of Sustainable Livelihoods, delivered across the two pillars of Rural Livelihoods and Skill Development. Since 2018, the Foundation is pursuing its ambitious ‘Mission 2 Million commitment of supporting 2 million households in India by March 2027 under Sustainable Livelihoods. Under the Mission 2 Million, ABFs interventions have impacted 1.7 million participants across 18 states and union territories as on March 31, 2024. In this fiscal alone, it reached 0.38 million participants.
Under the theme of ‘Financial Inclusion and Literacy, the Bank supports greater financial integration for economically weaker sections in rural and urban India as well as strengthening public policy through evidence-based research.
During the year, Axis Bank signed a Memorandum of Understanding (MoU) with the Institute of Rural Management Anand (IRMA), to establish the Axis Bank Chair for Financial Inclusion at IRMA. The primary objective of the Chair shall be to conduct and coordinate field-based research for the purpose of supporting national and state-level policies towards financial inclusion, capacity building for the banking sector in the domain of financial inclusion, conduct workshops, round tables, and symposia, and undertake teaching courses at the Institute.
The Banks direct financial literacy program, ‘Axis Sachetana, implemented by the Microfinance vertical of Bharat Banking, was active in 23 states and Union Territories in India, directly impacting 1.7 lakh women participants primarily in rural India. The intervention focuses on introducing participants to the concepts and importance of savings, insurance and personal finance.
The Bank has partnered with National Institute of Securities Markets (NISM), a SEBI-promoted entity, to conduct financial literacy sessions for college students in Tier 2/3 cities across India. The Program focuses on improving students understanding and adoption of savings and investments. During the year, 500 such sessions were conducted in 393 colleges, reaching approximately 38,000 students.
The Bank partnered with the Kalanjiam Foundation to support the financial inclusion of the population currently outside the ambit of financial ecosystem through financial literacy sessions on SCRIPT (Savings, Credit, Remittances/Payments, Investments/Insurance, Pension/Transactions Including Digital Banking). Under the program, the Bank expects to reach 7 lakh individuals across 71 blocks in 21 districts across 8 states over four years. In this fiscal alone, it reached close to 1.2 lakh participants in 50 blocks, 14 districts in 5 states. The Bank has supported a variety of diverse interventions across the country under the Education theme.
The Bank had launched Axis Dilse in 2018 as a specialized intervention focused on providing children from Indias remote regions and communities with improved access to learning opportunities. Today, Axis DilSe has scaled up significantly, primarily across the countrys eastern and north-eastern region, supporting thousands of children through diverse interventions delivered on ground by a strong network implementing partners.
The Bank has also partnered with the Armed Forces, including the Indian Army and the Assam Rifles, and National Integrity and Educational Development Organisation (NIEDO) to support the establishment of Centres of Excellence providing vulnerable youth, particularly from the North-east, with the highest quality of coaching and mentoring towards enabling them to participate in various Indian competitive exams in engineering and medicine. With NIEDO as the training partner, the fully residential Centres have been set up and are being set up with the Assam Rifles on their campuses in Manipur, Nagaland, Arunachal Pradesh, Mizoram, and Tripura and four centres are in the process of being set up with the Indian Army in Ahmednagar, Maharashtra, Gorakhpur and Uttar Pradesh. As of March 31, 2024, 252 students were being coached across all functioning Centres.
The Bank, in partnership with Tata Steel Foundation, is working in the entire Odapada block of Dhenkanal District, Orissa to bring all out-of-school children back to school by providing age-appropriate bridge education courses, providing a Learning Enrichment program to students with learning deficits, and supporting their enrolment into government schools. Additionally, the program envisages setting up libraries in approximately 150 schools. In the year, 240 children were enrolled into government schools.
The Bank continues to support scholarships to enable women and students from economically weak backgrounds to access high quality science and technology higher education. The Axis Bank Scholarship program at Ashoka University, Haryana supported 66 women scholars pursuing STEM degrees during the year. At Plaksha University, Punjab, the program supported 30 students from economically weaker backgrounds and from tier 2/3 towns pursuing undergraduate degree programs at the University.
The Banks partnership with the Indian Institute of Sciences (IISc), Bengaluru to support the establishment of the ‘Axis Bank Centre for Mathematics and Computing on the university campus continues to make steady progress. The Centre shall be a first-of-its-kind, multi-disciplinary centre of learning providing advanced degrees and supporting cutting edge research. During the year, the Centre commenced its activities from a temporary location on campus while the physical building moves towards construction.
Under the Environment theme, the Bank made considerable progress towards meeting its commitment planting 2 million trees across India by 2027. As of March 31, 2024, ~1.33 million saplings had been planted across 7 geographies by the Banks implementing partners. The Bank also supported Miyawaki plantations in the Navi-Mumbai region in the year. The Bank is
supporting new interventions focused on habitat restoration through agroforestry in the buffer zones of select national parks and wildlife sanctuaries in India. The interventions also supported vulnerable communities living in the peripheries of protected forests and reduction in human-animal conflict. Under its partnership with Investment and Development Authority of Nagaland (IDAN), a Nagaland Government entity, the Bank has supported setting up of solar-powered cold storage units across all 16 districts of Nagaland towards strengthening the rural agri-based-supply chain and supporting small scale agriproducers preserve their produce longer. Through its partnership with Ayang Trust, the Bank has strengthened long-term flood resilience among the communities in Majuli island, Assam.
During the year, the Bank provided urgent humanitarian support and relief in flood affected areas in Andhra Pradesh, Punjab and Himachal Pradesh. The Bank supported 175 paediatric cardiac surgeries for children from economically weak backgrounds diagnosed with congenital heart diseases (CHD).
Additional details on the Banks CSR governance, interventions and impact for the reporting year can be accessed in the Annual Report on CSR Activities which forms part of this Annual Report. Additional information is also available on the Banks corporate website at https://www.axisbank.com/csr and on the Foundations website at http://www.axisbankfoundation.org/.
ESG
Environment, Social, and Governance (ESG) is a key element of the Banks long-term organizational strategy and actions. The Bank continues to align its overall decision-making and subsequent operations to its Purpose Statement - ‘Banking that leads to a more inclusive and equitable economy, thriving community and a healthier planet.
In fiscal 2022, Axis Bank had become the first Indian bank to establish a standalone Board level ESG Committee, enabling the Bank to align its diverse priorities and activities under a unified and cohesive ESG agenda. Under the ESG Committees oversight, the Bank had also announced a series of ESG-aligned commitments with its business and non-business activities, which are being driven by the pertinent verticals across the organization. The Banks commitments are aligned to pertinent Sustainable Development Goals and to Indias climate commitments under the Paris Agreement. In fiscal 2024, the ESG Committee of the Board met 4 times, wherein it reviewed the Banks progress towards achieving its ESG-aligned commitments and also provided its guidance on new initiatives and activities. The Banks overall ESG-aligned activities, highlights and developments during the fiscal, including its progress on its commitments, are published in its annual sustainability reports prepared as er the GRI reporting framework. Towards strengthening its ESG-aligned disclosures and aligning them to the annual reporting cycle, this year, the Bank has prepared its first Integrated Report as per the <IIRC> framework and the GRI reporting framework.
Towards its commitment of achieving incremental wholesale lending of 30,000 Crores in sectors with positive sustainable impact by 2026, as included in the Banks Sustainable Financing Framework, the Bank has achieved 30,409 Crores of incremental lending as of March 31, 2024. During the year, under the oversight of the ESG Working Group that was set up in 2021 to formally guide and manage the Banks future sustainable financing activities, the internal tagging and tracking process for all such eligible transactions was successfully automated. In fiscal 2022, the Bank had also taken an internal commitment to scaling down its exposure to coal mining and trading, and thermal power sectors, which is being tracked on a quarterly basis and reported to the ESG Committee of the Board. As of March 31, 2024, the Banks exposure to these two sectors was well within the annual limits set as part of the glide path. The Banks total wholesale lending portfolio in the ‘green sectors stood at 18,907 crores as of March 31, 2024.
The Bank has also made progress on its commitments in Retail lending. Towards its commitment of incremental lending of 10,000 crores in Asha Home Loans by March 2024, the Bank has achieved a cumulative lending of 9,902 crores as of March 31, 2024. Notably, the Bank also increased the percentage of women borrowers under Asha Home Loans, with 17.70% women borrowers as of March 31, 2024, up from 5.86% as on March 31, 2022. Towards its commitment to making 5% of its Retail Two-Wheeler loan portfolio as electric by March 2024, the Bank achieved an EV share of 3.62% (cumulatively since 1 October 2021), partly due to policy changes such as changes to FAME II program and consumer anxiety around charging infrastructure and lack of used market. Notably, in this period, the Bank entered into exclusive dealer finance programs, launched a differential policy to support the EV segment, and scaled its retail tie ups, in addition to offering a sector-leading up to 0.5% interest discount on EV loans, thus achieving an EV share of 5.53% for this fiscal. The Bank is actively exploring pilot ESG aligned retail products including solar rooftop loans for SMEs and green home loans.
Under the ESG Committees oversight, the Bank has been actively working towards strengthening its climate risk management capabilities at the enterprise level. In 2022, the Bank had reached its first milestone of embedding ESG- and climate-related risks and opportunities into its annual Internal Capital Adequacy Assessment Process (ICAAP). In 2023, the Bank had also
significantly strengthened its ESG Policy for Lending that integrates environmental and social risk assessment into its credit appraisal for Wholesale Banking. The updated Policy now mandatorily requires scrutiny of proposals in sectors identified as hazardous, such as coal mining, thermal power and hazardous chemicals. Notably, key proposals discussed at the Boards Committee of Directors now include an assessment under the ESG Policy for Lending.
In 2023, the Bank had launched a pilot ESG Rating Model for the top 150 clients in the Wholesale Banking business vertical. The Model, developed in-house, includes more than 60 parameters across the three pillars of E, S and G. The pilot was completed in this reporting fiscal and went live in March 2024. Notably, the Bank has also published its first ESG Risk dashboard, that has also been presented to the Boards Risk Management Committee. As part of the said Dashboard, the Bank has also developed a hazard heat map for identified sectors, including its Retail Mortgages, Rural, and MSME lending verticals. Additionally, the Dashboard also includes an assessment of the transition risk in sectors identified as having "high" transition risk, including iron and steel, cement, and fertilizers and agrochemicals. During the year, the Banks Risk and Wholesale Underwriting verticals participated in a two-day Climate Risk training by Indian and international experts as part of a UK Government program.
The Bank continues its focus on Diversity, Equity, and Inclusion (DEI). Towards its commitment to achieve 30% representation of women in its workforce by fiscal 2027, the Bank has been actively scaling up its hiring diversity across all business and support verticals, and launched new initiatives that while supporting its #ComeAsYouAre Charter, also help expand its talent pool. The Bank had launched the #HouseWorkIsWork campaign in fiscal 2023 for hiring qualified women keen to return to the workforce after a hiatus. The Bank made 22 hires during this fiscal. The Bank continues to scale its internal campaign - Pause for Bias, towards addressing widely prevalent and often unconscious biases among people. The Banks Women in Motion initiative continued to scale during the year, reaching 34,000+ people that included community health workers, Asha workers, women from local self-help groups and students of all genders across the hinterlands of Maharashtra, Goa, Karnataka. Andhra Pradesh and Telangana. Under the Banks proprietary 6-hour Axis DE&I Curriculum on Building and Leading Inclusive Organizations, the bank conducted sessions in 16 institutes certifying 600+ students.
During the year, the Bank significantly scaled up its participation in and contribution to thought leadership and advocacy around the topics of ESG, climate change, financial inclusion, diversity, and sustainable finance, among others. The Banks senior leaders are members of key committees on these topics at FICCI, CII, IBA, MCA, among others, as well as at the market regulators including SEBI. The Bank is a member of the World Economic Forums Alliance of CEO Climate Leaders, and also presented the industrys views as part of B20 India ESG in Business Action Plan - under Indias G20 presidency this fiscal.
The Bank continues to deliver steady performance at key ESG assessment and recognition platforms. The Bank was on the FTSE4Good Index for the seventh consecutive year in 2023. The Bank maintains an ‘A Rating by MSCI ESG Ratings and is scored C in the CDP. The Bank is placed at the 80th percentile among banks globally at the S&P Dow Jones Sustainability Indices in 2023 and has an ESG Risk Rating of 23.5 as of last full update - December 2023 by Sustainalytics. Axis Bank is among Top 10 Constituents of S&P BSE CARBONEX Index, MSCI India ESG Leaders Index and the Nifty100 ESG Sector Leaders Index.
Human Resources
Employees remain the most critical driver in Banks journey towards achieving its long term objectives. Open is a commitment that the Bank has made to each member of the Axis Bank family who have placed their trust in the Bank, to help them live their best lives at work. Year after year, the Bank has challenged itself to come up with new initiatives and practices with the aim of creating an enriching environment for its employees.
Nurturing a deeply-routed culture - The Banks culture is built upon the foundation of its 5 core values: Customer Centricity, Ethics, Teamwork, Transparency and Ownership. These values enable the Bank in building a fair, diverse, and performance- driven culture. A network of ~1,300 Axis Value Realizers (AVRs) are the ambassadors of the Banks culture, driving change and are instrumental for promoting the core values across the Bank. During the year, the Bank has been recognised as a Great Place to Work? certified organization for the third time in a row. The Bank has also received the Kincentric Best Employer award and has been inducted into the Indias Best Employers Club for its consistent performance as an employer of choice.
Betting on internal talent - The Bank has built a compelling proposition around internal careers named ‘thrive and endeavors to complement the program with structured engagement of top management with its employees. These include quarterly webcasts, town hall meetings, besides travelling nationwide to meet teams on a regular basis. In fiscal 2024, the Bank pivoted the HR model on providing opportunity to the employees to explore and leverage the internal job platform ‘Catalyst for enhancing their career path. All jobs available at Axis Bank group are posted on ‘Catalyst at least 7 days before they
are publicly posted and remain open for internal recruitment until they are filled. The Bank also linked internal movements to promotions through the year upon applying to higher grade roles, which allowed fast track promotions up to one year earlier than regular tenure-based eligibility. In fiscal 2024, a total of 4,509 employees moved jobs internally at Axis Bank, via ‘Catalyst.
Creating a strong pipeline of young leaders - To achieve the strategic objectives of the Bank, the talent management efforts are focused on enhancing key skills and establishing a culture based on performance excellence. The Bank has two distinctive talent management tracks, AHEAD Internal and ASTROS, to identify employees with consistent high performance. The third edition of the AHEAD Internal program was launched in March 2023 and a group of 33 employees were selected. The selected employees went through an induction program along with Tier-1 management campus joinees. Each stint is followed by a review session with the department head and other senior leaders of the respective business unit. In this edition, AHEAD Management Trainees (MTs) were also given branch immersion exercises to get a deeper level understanding of how the Bank operates on the ground. ASTROS is the Banks high-potential program with the intention to carve out new career paths for employees in middle management while simultaneously building the Banks pipeline for future leaders. During the year 83 leaders were identified in Astros 2023. Apart from fast-track career growth, employees were involved in a 2-day intensive learning burst.
Learning and capability building has been a key focus area for the Bank this year. The Bank identified 11 distinct capability factories to help build banking knowledge. During the year, a total of 8,430,640 learning hours were imparted and the learning programs covered 103,814 employees under various initiatives.
Nurturing environment for young minds - The Bank onboards 3,000+ campus graduates through diverse programs. AHEAD - Flagship program for young leaders from Tier 1 B-schools of the country like IIMs and equivalent campuses. The program extends to both Interns and Management Trainees from these campuses. Aspire -an initiative for management graduates from new IIMs and Department of Management Studies in established IITs, tapped for niche hiring in key departments to build a robust talent pipeline. ABLe - the Banks cadre program for recruiting post-graduates (MBA/PGDM/MMS) from Tier 2 B-Schools across the country. WeLead - Banks flagship diversity hiring program where women management graduates are hired from Tier 1 B-Schools and offer them rich and challenging roles in middle-management level. ARISE - a program that is Open to any undergraduate or postgraduate, fresher or experienced up to 5 years, without restrictions on campus. The program reached more than 5,000 campuses, 25,000 students and was spread across 70 cities.
The Bank has also partnered with NIIT & Manipal to run academic development programs which allow one to master skills in their area of interest. Post successful completion of the course, students get an assured job with Axis Bank!
Performance driven culture, anchored on meritocracy - To build a culture of high performance and feedback conversations, last year, the Bank introduced KRA based, Mid-Year check-in for all employees with an aim to ensure that managers are accountable for their team members performance and transparent discussions. To control attrition at various levels across the Bank, we continue to add a mandatory attrition based KRA for all AVP and above team leaders in the Bank with a team size of more than 4.
Creating an ecosystem where women & diversity groups can excel - The Bank is committed to having 30% women in the workforce by 2027 and has put in place a series of initiatives to make the DE&I (Diversity, Equity and Inclusion) efforts visible and conducive to exist for every member in the organization. Pause for bias training is a part of the induction program, and so far, the team has conducted 361 ‘Pause for Bias sessions and have covered 55,660 employees across the Bank. Senior leaders have reached out to over 26,500 students as a part of the Axis Women in Motion (WiM) outreach sessions. The Banks inclusive hiring policy mandates all job descriptions to have the following prompt - #ComeAsYouAre - Women, LGBTQIA and PwD (Persons with Disabilities) candidates of all ages are encouraged to apply. In FY24, our diversity rate is 25%.
Health & Well-being - The Banks in-house professional counsellors offer unconditional support to employees by addressing personal wellbeing concerns through confidential one-on-one and online sessions. Around 1000 employees have sought counselling therapy as one-on-one or group sessions. Progressive leave policies also play a critical role in enabling work life balance such as gender affirmation surgery, leave for birthing parent, leave for partner of birthing parent, mental health, adoption leave, sabbatical, etc. The Bank offers medical insurance covers for employees and their dependents.
Recognizing excellence across levels - The Bank recognizes employees for their greatness at work under the visibility of senior most leaders of the Bank. Champions Awards, the flagship Annual Rewards & Recognition event, celebrates employees for going beyond the call of duty to exhibit the core values of the Bank. Last year, 127 champions were felicitated by the chairman of the Board and MD&CEO. Another 177 were awarded Regional Champion certificates.
Anchors is the Banks quarterly recognition program for all employees up to Vice President grades across the country. Demonstrating excellence in everyday work is the theme of this recognition property, where employees are nominated by their Department/Circle Heads across 3 distinct award categories - Supernova, Game Changer and Team Player. OGs, the recognition program for the Banks vintaged employees who achieve service milestones at 5-year intervals. A total of 4,071 OGs were felicitated. Last year, we introduced Retiring with Pride, felicitating 25 employees retiring from the Bank.
Redefining the conventional workspace - With the launch of GIG-A Opportunities in 2021, Axis Bank became the first among Indian Banks to adopt the concept of ‘future of work in full swing. By recruiting from a diverse set of communities and giving them the flexibility to work from anywhere, the Bank intended to become an organization with diversity in all aspects. GIG-A 2.0: A pilot for close to 500 employees was launched in Feb 2021 in conjunction with select teams to test and scale up the hypothesis that work can be successfully done from anywhere. The Bank is now operating with about 2544 GIG-A employees.
Through GIG-A opportunities, the Bank also opened doors for freelancers who were willing to work with on specific projects of the Bank on a part-time basis, allowing them to continue with their other professional and personal commitments. The Bank now has 150 freelancers delivering niche skills across the organization with a gender ratio of 1:1.
The Hybrid way of working is here to stay. The Bank successfully run rosters for every department. Apart from branches, employees are required to visit office twice a week and are advised to work from home on the rest of the days.
Subsidiary Performance
The Banks subsidiaries remain central to the principle of "One Axis and have an important role to play in the Banks strategy formulated around the three vectors - Growth, Profitability and Sustainability. In a short span of time, the Bank has established subsidiaries covering a significant gamut of the financial services space, with some of them being leaders in their segments. Axis Capital continues to maintain its leadership position in the ECM segment. Axis Mutual Fund maintained its position as the fastest growing AMC amongst the Top 10 players and is now the eigth largest player with over 5.07% share in the industry AUM, Axis Finance has grown its AUM at a 46% CAGR in last 5 years while delivering healthy returns.
The Bank continues to focus on further scaling up the subsidiaries so that they attain meaningful size and market share in their respective businesses. During fiscal 2024, the Banks subsidiaries delivered strong performance with reported total income of 6,768 crores and earnings of 1,608 crores up 24% Y-o-Y.
Axis Capital Limited
Axis Capital, the Banks investment banking and institutional equities franchise has been the leader in equity and equity linked deals over the last decade and had another great year with highest number of transactions (90 transactions across IPO, QIPs, OFS and Rights Issue). Axis Capitals earning increased by 6% and contributed 9% to the total earnings of the subsidiaries.
Axis Asset Management Limited
Axis AMC, that had ~12.4 million client folios as at end of March 31, 2024 and contributed 26% to the total earnings of the subsidiaries. The company manages 73 mutual fund schemes with a closing AUM of 2,66,826 crores as compared to closing AUM of 228,261 crores as on March 31, 2023 and was ranked 8th amongst the mutual fund Industry in India.
Axis Securities Limited
The retail brokerage firm reported 15% growth in cumulative client base to 5.45 million. Axis Securities earnings grew 48% as compared to previous period, and contributed 19% to total subsidiaries earnings. The subsidiary achieved a trading volume of 1,663,447 crores thereby registering a growth of 73% in fiscal 2024.
Axis Finance Limited
Axis Finance Limited, the Banks NBFC has been diversifying its loan book mix and has made significant investments to grow its retail team with the objective of becoming a consumer focused lending company. Axis Finances earning increased by 28% Y-o-Y and contributed 38% to total subsidiaries earnings. Axis Finance remains well capitalized with Capital Adequacy Ratio of 19.24%. Its asset quality metrics remain stable with net NPA declining 8 bps Y-o-Y to 0.28% as of March 31, 2024.
Freecharge Payments Technologies Private Limited
Freecharge, in addition to offering Payments and Banking products to consumers, has diversified offerings to the merchant ecosystem. It is solving for digital payments via Payment aggregation offering, and offline payment acceptance via QR solution thus building a comprehensive suite of offerings to cater to all merchant payment needs. The company has also increased physical presence to 55 locations and is offering Current account and Loans to its 10 la khs+ and growing merchant base.
Freecharge clocked 1.3 million users, GMV of over 29,000 crores and 157 million transactions in fiscal 2024 . The consumer payments app continues to be leveraged to offer Banking products such as Digital Savings account, Fixed deposits, credit cards and loans to the consumer user base.
A Treds Limited
A.TReDs Limited, the Banks subsidiary that was set up in partnership with M-Junction, was one of the three entities allowed by RBI to set up the Trade Receivables Discounting System (TReDS), an electronic platform for facilitating cash flows for MSMEs. The Banks digital invoice discounting platform ‘Invoicemart has set a new benchmark by facilitating financing of MSME invoices of nearly 1,04,000 crores . It currently has ~31,400 participants on the platform and has e-discounted nearly 26 lakh invoices since start of its operation from July 2017.
SAFE HARBOR
Except for the historical information contained herein, statements in this Annual Report which contain words or phrases such as "will", "aim", "will likely result", "would", "believe", "may", "expect", "will continue", "anticipate", "estimate", "intend", "plan", "contemplate", "seek to", "future", "objective", "goal", "strategy", "philosophy", "project", "should", "will pursue" and similar expressions or variations of such expressions may constitute "forward-looking statements". These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include but are not limited to our ability to successfully implement our strategy, future levels of non-performing loans, our growth and expansion, the adequacy of our allowance for credit losses, our provisioning policies, technological changes, investment income, cash flow projections, our exposure to market risks as well as other risks. Axis Bank Limited undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.
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