Slowdown ‘a growth opportunity for Axis Bank’: CEO

We have about 4.5 per cent market share in savings bank deposits and advances. In the case of term deposits, we were behind (the curve), but now we have caught up. So, the size of Axis Bank in comparison to the overall size of the market is quiet small….My basic notion is that if we have to get a little bit of market share, we can continue to get growth for the longest period of time and still not shake the market. So, because we are where we are, that itself is an opportunity. In the context of what is happening in public sector banks (PSBs) – the mergers are a good thing – but if you analyse the history, you will notice that when a merger happens, they go through their own challenges.

Every bank has its own culture, and it takes time for the amalgamated entity to settle down. There is some market share anyway, which is shifting from PSBs to private sector banks. Some of these banks might go through a slightly longer period of being unsettled.

So, we potentially gain more market share….There is an opportunity. If we can get our act right, we can gain some more market share because some of the (PSB) customers might feel that they are not being serviced, or when a consolidation of (loan) facilities happens, the consolidated bank might tell the customer that since our consolidated exposure is too high we would like to reduce it. So, opportunity can be there for a bank like Axis.

The Indian economy is growing even though at a lower rate, and that itself provides opportunities. So, every which way you look at it, the opportunities are huge.

Now, Axis Bank has been a pretty large player on the wholesale side for a long period. On the retail side, we have very successfully built the business over the last 10 years or so.

There are several product categories where we didn’t have a presence. For example, we just launched two-wheeler and consumer durables financing business. So, there are a couple of product categories where our presence is still quiet small. And, there are a lot of product categories where our ranking is still no 4 or 5.

So, we have to catch up and try to be among the top 3. So, opportunities are all over. Then our subsidiaries are sub-scale in the sense that our mutual fund is ranked number 9; Axis Finance, which has an AUM of ₹8,000 crore, is in an environment where it can grow; Axis Capital is doing quiet quiet well; and Axis Securities is ranked number 5, but it can move up the ranking scale.

So, there is an opportunity to grow each of the subsidiaries. I am very optimistic about what the (Axis) platform is and what it can become over a period of time. Now, it all depends on how we execute going forward.

We will grow at a rate which is at least 5-6 percentage points higher than the average industry growth.

If you look at our second quarter results, our domestic advances grew 19 per cent, while the industry grew at sub-10 per cent level….At the same time, we added 190 branches last quarter. And that is the highest that we added in the last 24 quarters.

So, while other banks keep talking about how they are going to increase the number of branches, we have actually, very quietly, gone and done it. And, hopefully, we will keep doing that only rather than talk about it.

So, we are focussed on the retail side. We continue to expand our retail franchise. At the same time, on the wholesale side also, we are trying to increase business. We want to take a conservative stand vis-a-vis our overall risk profile and underwriting on this front.

Yes, of course. We have mentioned that our net profit would have been up by 100 per cent if not for the DTA. Hopefully, things will go up and we will be back on a similar track. We have said our slippages have remained elevated, but we are doing quite well on operating metrics, and I don’t see why that will change dramatically.

We have a large stock (of stressed assets), and we have not completely worked out a way through that. And given the current economic environment, some of the stock is slipping into NPL (non-performing loan) faster than what was anticipated. But, ultimately, the overall stock is coming down and hopefully in three years our credit cost will come down to below 1 per cent because the hope and belief is that we are now underwriting assets of a qualit,y which is significantly a step up to what we were doing earlier. In the short term, what will happen to some of the corporates is still very unclear. We have to watch, but the confidence is that the size of the problem is coming down.

With the right kind of management, where the disclosures are good, where we believe that the risks are better managed, we are going ahead and lending more. But where we believe that the risks are higher and disclosures are less/ transparency is not full, we would like to ensure that we can get out of that problem. But if everyone starts rushing to the door, then we might not be able to get out. So, we have to manage it. And I think every bank is looking at it and trying to manage it. But definitely, no new funding will flow to such NBFCs. If no new funding comes through, whatever money NBFCs collect will go to repay the banks. Then, NBFCs are literally shut for business and they become a closed book. So, what happens is that the valuation goes for a toss. If this happens, the ability of NBFCs to raise capital becomes suspect…So, NBFCs are going through a huge churn. And in that churn, some of the weak ones will get caught out.

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