In fiscal 2020, the Bank successfully
raised `12,500 crores of capital
through one of the largest ever QIP
issues by a private sector issuer,
this strengthened the Bank’s capital
ratios, with total adequacy of 17.53%
and CET1 ratio of 13.34%. The
operating profitability in fiscal year
2020 continued to remain steady with
16% growth in net interest income
and 23% growth in operating profits.
The Bank’s net NPA plus BB & below
book has declined substantially to
2.7% from 3.4% at the end of last
fiscal. The provision coverage (without
considering write‑offs) increased to
69% from 62% at the start of the
year. The Bank now holds additional
provisions aggregating to `5,983
crores towards various contingencies
which are not included in the
aforementioned provision coverage.
The Governments and Central banks
across the world have responded
with massive fiscal, monetary and
regulatory measures to counter the
outbreak of virus and protect their
respective economies that have come
to a near standstill state. However, the
global economic activity will take a
long time to recover. The Government
of India and the Reserve Bank of India
have responded swiftly, announcing
wide measures to aid weaker sections of society and facilitate credit flow
to the economy; and I expect further
measures from them to consistently
support the economy during the
prolonged recovery phase. As the
economy continues to combat the
unprecedented uncertainty caused
by COVID‑19 pandemic outbreak
since the start of this calendar year,
we have lived up to our promise to
the nation of being a responsible
citizen, being ‘Open’ to address the
needs of our customers, employees
and communities.
The Bank has been agile and
responsive to the ever changing
situation. We had proactively
strengthened the operational and
technological infrastructure needed,
to ensure continuity of normal
operations. During the lockdown
phase implemented by government,
over 96% of our ATMs and 99% of
our branches were operational. We
implemented a large‑scale ‘work from
home’ mandate with over 9,000 VPN
and VDI connections provided to
ensure business continuity and almost
100% of the critical activities were
capable of being executed by working
from home. I am immensely proud
of our team of 74,000+ who came
together as one, working fearlessly
from branches, offices and from their homes to reach out and serve the
customers in their most difficult times.
The customer feedback and stories of
support are a strong testament to the
Axis spirit. We reached out to almost
3 lakhs customers on a daily basis
during this period.
The Bank has been agile
and responsive to the ever
changing situation. We had
proactively strengthened the
operational and technological
infrastructure needed,
to ensure continuity of
normal operations.
The Bank has navigated this
unprecedented and challenging period,
well assisted by our capital position,
adequate liquidity buffers and stable
deposits franchise.
Several of the initiatives that we
implemented during the year under the
Bank’s GPS strategy helped us to be in
a better position in these trying times.
Our teams have deliberated, created
and executed on new strategies
and ways we work, to enable us to
be adequately and appropriately
be prepared to get back to work on
return to normalcy.
In fiscal year 2020, we continued
to invest in each of the core pillars
of our franchise – people, products
and technology. Our operating
performance was stable, while we
continued on our journey to be
conservative in our approach towards
building a sustainable franchise.
During the year, we have completed
the organisation restructuring and
strengthened our teams to bring
in greater business focus and drive
performance and efficiency. We
carved out the credit underwriting
functions which resided within the
business segments, to enhance
governance and further strengthen the
risk framework in the Bank.
The Bank has over the last decade,
built a strong Retail franchise that
continues to deliver healthy growth
in retail deposits, and constitutes
significantly to our overall loans
and fees. During the year, we made
changes to the organisation structure
in Retail with creation of separate
liability sales vertical to increase
focus on new customer acquisition
on the CASA (Current and Savings
Account) and Retail Term Deposit
(RTD) side even as branches focused
on deepening the relationship with
existing customers. Our focus towards
building a granular, stable and low
cost liability franchise saw sustained
momentum with 22% growth in CASA
plus RTD deposits (on cumulative daily
average basis) for the year.
Branch banking remains an integral
part of our growth strategy and we
have made significant investments
in building a high quality liability
franchise. During the fiscal year, we
opened 478 branches – our highest
in any given fiscal year. The branch banking continues to focus on
deepening relationship with existing
bank customers and cross selling
of products across the Axis Group
franchise. We have also undertaken
efforts to deepen the Axis Franchise
in rural and semi‑urban areas, in order
to increase our market share in these
regions and simultaneously help in
further complementing our Priority
Sector Lending business. However,
given the uncertainty induced post
COVID-19, we may delay branch
network expansion in the immediate
near term even as we continue
to engage in optimisation of the
branch formats to deliver enhanced
productivity, led by automation and
digitisation of service operations.
The Bank has navigated
this initial unprecedented
and challenging period,
well assisted by our
capital position, adequate
liquidity buffers and stable
deposits franchise. Several
of the initiatives that we
implemented during the year
under the Bank’s GPS strategy
have helped us to be in a better
position in these trying times.
During the year, the Bank’s Retail
loan book grew by a healthy 24%
and now contributes 53% share in
total advances. Although the Bank
has significantly diversified its Retail
loan book over the years, led by
right product propositions, the book
continues to remain largely secured
with high proportion of existing to
Bank customers. The secured loans
constitute 80% to the book and more
than 80% of retail assets are sourced
from existing customers.
We would continue to focus on
secured retail lending while maximising
cross sell opportunities to the
Bank’s existing deposit customer
base and leveraging the Bank’s wide
geographical and digital infrastructure
network for cost optimisation. The
proportion of retail assets sourced
through digital means have been
steadily increasing with over 44% of
personal loans in fiscal 2020 sourced
digitally; we are now working on digital
lending solutions for the secured loan
products with digital home loans for
funding of approved projects.
The Bank’s strong data analytics engine
and robust proprietary risk scorecards
have ensured superior underwriting
across the retail portfolio and more
specifically in unsecured loans.
At the
same time, our asset recognition and
provisioning standards continue to
remain best in class in the industry with NPA recognition on daily basis and full
provisioning on unsecured products like
personal loans and credit cards upon
asset being classified as substandard on
90 days past due basis.
Our wealth management business,
Burgundy with assets under
management of over `1,47,000 crores,
continues to do exceedingly well.
During the year, we launched Burgundy
Private, our most exclusive offering,
which caters to the distinct needs of
niche segment of high and ultra‑high
net worth clients. The Burgundy Private
proposition has scaled up rapidly
within just 4 months of its launch to
cover over 850 families across 15 key
locations with assets of nearly `18,000
crores as at 31 March, 2020.
The performance of our Wholesale
business continued to improve in fiscal
2020 with domestic corporate loan
growth of 13%. We have built strong
relationships with the better rated
domestic corporates and continue
to focus on gaining a higher share
of shorter tenure working capital
and transaction banking businesses.
We are also leveraging on our ‘One Axis’ strategy; our ability to provide
comprehensive solutions to clients
across lending and Transaction
Banking along with our subsidiaries like
Axis Capital and Axis AMC resulted
in deepening of relationship with the
Bank’s large and strategic clients.
During the year, we have reviewed
and optimised our overseas operations
in line with the overall corporate
strategy. We are consolidating
the services related to corporate
banking, trade finance, treasury
and risk management solutions
through our Dubai, Singapore and
GIFT City branches.
In the commercial banking segment,
we have been cautious, and invested
throughout the last twelve months in
rebuilding the business across sales
and credit. This exercise is complete
and we feel we can capitalise on
this going forward. We continue
to focus on building a relationship
based model with high rated SME and
current account business customers.
The SME book is well diversified and
quality remains steady with 85% of
it secured by hard collaterals and
with high proportion of working
capital loans. During the year, we
further strengthened our systems and
processes to ensure that we respond
quickly to any early‑warning signals
in our portfolio.
We have strong market positioning
across most digital payments solutions
and remain committed to contribute
towards the government’s Digital
India mission. We have one of the
best rated mobile apps in the country,
and continue to remain among the
top three leading players in the
UPI ecosystem. In credit cards, we
continue to be ranked 4th in terms
of market share in card spends and
have further strengthened our card
portfolio with launch of new cards
- Magnus and Burgundy Private,
as well as co‑branded cards with
Flipkart and IOCL. Our market share
in the payments related to RTGS and
GST also remains strong. The Bank
foresees significant opportunity in
digital payments space, given the size of the opportunity. During the year,
the Bank designed and implemented
comprehensive solutions like Bharat
Bill Payments Services, Smart City
Solutions and FASTag, thereby
providing powerful platform for users,
billers and administration to transact.
We made good progress on our Digital
Banking initiative started last year.
We now have a team of over 500
highly skilled employees working
across our digital and fintech platforms
from a dedicated and separate new
office in Mumbai. We have multiple
cross‑functional garages working
on end‑to‑end digital journeys and
value propositions. These journeys
and garages will go live in the current
financial year. Given the environment,
we have prioritised some of them
like video‑based KYC, digital savings
accounts and fixed deposits, simpler
current account on boarding alongside
digital collections; and expect them to
go live during the next few months.
We will continue to enhance our
customer experience and offerings
through new innovations on the digital
side and investments in API, cloud,
artificial intelligence and big data, we
remain cognisant of the emerging
cyber security threats and privacy
laws. We have made considerable
investments in technology and
infrastructure to strengthen the core.
During the year, the Bank won the
Best Cyber Security Project, Best
Financial AI Project and Best Risk
Management Project at The Asset
Digital Awards. The Bank also won
the award for best use of IT in Risk
Management at the Dun & Bradstreet
BFSI Summit & Awards 2020; these
awards serve as a testament of our
strong digital and IT capabilities.
We have simplified and strengthened
various process and quality gaps to
enable the Bank to deliver process
excellence and superlative customer
experience. During the year we have
reorganised our IT, Operations and
Data Science teams under the Banking
Operations and Transformation
vertical. The teams are entrusted
to transform the operations of the Bank so that we have one of the best
systems and processes among Indian
Banks and are also ready to seamlessly
integrate the various digital journeys
that our Digital Banking teams are
building simultaneously. The success
of this initiative is visible through
the high numbers of branches and
ATMs, which have been functional,
employees working from home, digital
collection initiatives under severe
lockdown and mobility restrictions in
the past few months.
We have strong market
positioning across most digital
payments solutions and remain
committed to contribute
towards the government’s
Digital India mission. We have
one of the best rated mobile
apps in the country, and
continue to remain among the
top three leading players in
the UPI ecosystem.
We implemented a uniform visual
brand identity for the Bank and
subsidiaries to drive consistency and
strengthen the ethos of One Axis
across the our retail, digital and offline
touch‑points. Several cross‑functional
programmes were initiated where
different teams came together to work
on common goals and this has started
to become a differentiator for us in the
market. We are beginning to see early
results in cross selling by leveraging
customer data available within One
Axis, in a fully compliant manner.
Our subsidiaries continue to deliver
strong operational performance even
as we remain focused on improving
our market share and attaining scale
in respective businesses. We have
made significant senior talent infusions
across our subsidiaries in Axis AMC, Axis Capital, Axis Finance, and Axis
Securities, our retail brokerage
business. During the year, Axis Capital
and Axis AMC continued their market
dominance in equity capital markets
and mutual fund space, respectively.
We entered into a strategic
partnership and signed an agreement
with Max Financial Services to acquire
a
30% stake in Max Life Insurance
subject to requisite regulatory approvals. We have always believed
in increasing participation in the
under‑penetrated life insurance space.
We value our relationship with each
of our insurance partners and will
continue to work with them.
I am pleased to state that our GPS
strategy is even more relevant in these
challenging times, and we continue our
relentless execution focus, even as we
may need to recalibrate the timeline In response to the COVID-19 situation,
we launched about 15 strategic
initiatives that are aligned to GPS,
but with near‑term perspective of
60‑90 days to ensure we are well
prepared and are among the earliest
to capitalise on the opportunities.
These projects are equally distributed
focusing on business and key elements
like cost control, capital optimisation, efficient liquidity management,
risk mitigation and reimagining
the work culture.
