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Message from Executive Directors
and Management

Message from Executive Director
(Wholesale Banking)


Message from Executive Director- Rajiv Anand

During the year, Corporate India displayed extreme resilience and adaptability through the tough times by not only managing their supply chain, people and containing costs, but also raising capital.

- Rajiv Anand

ED - Wholesale Banking

Large private banks have continued to gain market share in both deposits and advances over the last few years and fiscal 2020-21 also witnessed similar trends. Abundant global liquidity and strong corporate performance ensured significant deleveraging by corporate India. Corporate banks in turn saw lower slippages, despite COVID. However, growth of credit to the corporate sector remained anaemic.

During the year, Corporate India displayed extreme resilience and adaptability through the tough times by not only managing their supply chain, people and containing costs, but also raising capital. The share of bank credit in overall flow of resources to commercial sector remained low as corporates utilised the low interest rate environment to mobilise funds through private placements and foreign investments during the early part of fiscal 2020-21. Though the industry credit to large corporates related to sectors like telecom and metals declined on account of large repayments, the sectoral credit growth in mid-corporates saw strong revival with 29%.

One of the themes that has been playing out over the last few years has been the consolidation of businesses across industries and the shift of corporate banking business from public sector banks to private banks. In the last five years alone, private banks collectively have gained about 10% market share in corporate loans from PSU banks. This trend of corporates consolidating their banking relationships will continue to benefit large banks like Axis Bank who can provide holistic solutions and superlative customer service leveraging on their wide product offerings, efficient processes and digital prowess.

It is in this context that we feel positive about building a sustainable and profitable Corporate Bank, going forward. We will continue to focus on better-rated corporates with an aim of not just lending balance sheet to these clients but also become the transaction bank of choice. This strategy not only deepens the relationship but also ensures we capture multiple revenue stream from the corporate. Our focus on delivering disproportionate growth from our chosen sectors, like Mid-Corporate, MNC and SME segments will continue. This will also bring a greater level of granularity to the overall portfolio, thereby reducing the risk.

A key area of distinctiveness is our ability to deliver 'One Axis' to our customers. We are currently one of a kind full-service Wholesale Bank that offers varied solutions across all financial services. From, traditional banking products, debt capital markets, investment banking to NBFC and Retail banking products like Burgundy wealth management, salary and trust services, forex and commercial credit cards.

There are numerous examples where Axis Capital, our Investment Banking subsidiary has lead managed an IPO, the Bank has provided transaction banking services, Axis Trustee Co provided trustee services to the issue, Burgundy, our affluent banking proposition distributed the issue and finally some of the surplus funds were parked with Axis Mutual Fund scheme, thereby providing a one-stop shop for the customer, something very few of our peers are able to do.

Aligned to our GPS objectives, we have taken number of significant steps around strengthening the organisation structure and processes in the last two years. We have re-oriented the organisational structure to ensure better client coverage by increasing the number of coverage segments and segregating the responsibilities of business relationships and product specialists. We have also strengthened our leadership team across our focused segments like Mid-Corporate, Government Coverage, MNC and Commercial Banking; and embedded rigour in our way of conducting business for delivering execution excellence and growth aspirations.

These efforts have started reflecting in the strong growth performance in our focused segments. Our corporate loan book growth, including TLTRO investments was strong at 16% as we continued to focus on disciplined execution of our strategy. The growth was more prominent in our focused segments across Mid-Corporate, Government coverage and MNC that grew by 31%, 66% and 49%, respectively on y-o-y basis. Our Commercial Banking business delivered strong all-round performance with 13% growth in advances and 24% growth in average current account balances.

One of the key changes in the coverage model has been the focus on looking at customer relationship opportunity on a RAROC basis and rigorously work towards providing holistic solutions to the customer. Our teams have also been proactively taking lead in setting up the right infrastructure and service architecture to service the customers. As a result of these efforts, we added close to 800 new credit relationships in the Corporate segment.

One of our strategic growth objectives has been to significantly grow our Mid-Corporate segment where we have been underpenetrated. During the year, we continued to invest in strengthening our team structure and geographical presence in specific industrial clusters.

Our focus on quality coverage has been well recognised by our clients and independent parties as well. During the year, Axis Bank was ranked no. 1 and was the only domestic bank that featured in the Large Corporate (Institutional and Coverage Quality) leader category at the 2021 Greenwich Excellence Awards.

Our CBG which is one of the most profitable segments in Wholesale Bank has always been a strategic priority for us. Over the last couple of years, we have been strengthening our operational processes and risk framework in the segment. We had embarked on a tech-driven transformation project ‘Sankalp’ in this segment with the objective to re-imagine the end-to-end customer journeys, simplify the processes and improve sales productivity within the CBG business. The implementation of this digitisation initiative has helped us in reducing the loan approval time by nearly 75% while pushing the productivity of RMs up by 2 to 3 times. Our focus on acquiring new customers aided by ‘Sankalp’ and better co-ordination with branch banking teams have yielded strong results in the segment with over 100% increase in new relationships added during the year. We remain confident of growing this segment strongly led by our persistent focus and cadence in engaging with clients.

One of our strategic growth objectives has been to significantly grow our Mid-Corporate segment where we have been underpenetrated. During the year, we continued to invest in strengthening our team structure and geographical presence in specific industrial clusters in this segment. We have also been leveraging our strong branch network to build and consolidate relationships. We believe that we have significant run-way for profitable growth in this segment in the medium term.

We continue to maintain our strong positioning among the leading private sector banks handling the Government Businesses across the country. In our Government coverage segment, we have strengthened the team and improved our product and service delivery, that has helped us to get higher share of short-term trade finance and transaction banking businesses. We continue to remain focused on offering holistic solutions in segments like e-Governance, Finance Commission, Centrally Sponsored Schemes, Urban Local Bodies, Education, Agriculture, Health, NHAI and Defence. The recent government move to open up all the government related banking business to private sector banks plays to our strengths in this segment and further strengthened our position.

During the year, we continued to deepen our relationship with better rated entities and groups, focusing more on working capital loans and engaging with them for transaction banking products. In fiscal 2020-21, over 94% of our incremental sanctions and over 85% of loans outstanding were to corporates rated ‘A’ and above. While we continue to participate in the credit business, we have been putting all efforts to gain higher share of trade businesses like LC and BG, and supporting them in their transaction flow businesses like current account and cash management, forex and derivatives, capital market, tax payments, etc.

In the Transaction Banking space, we have revamped the organisation structure and service architecture of our wholesale banking products group. With improved product and service offerings, coupled with specialised talent inducted, we have made considerable progress in gaining incremental wallet share.

In the Transaction Banking space, we have revamped the organisation structure and service architecture of our wholesale banking products group. With improved product and service offerings, coupled with specialised talent inducted, we have made considerable progress in gaining incremental wallet share. Our market share in foreign LC nearly doubled to 10% while the GST payments too increased to 9% during the year. We have been one of the leading banks in Bharat Bill Payment ecosystem contributing to the highest number of new biller additions to this platform. Resultantly, the share of non-credit granular fees in overall corporate and commercial banking fee mix increased to 57% in fiscal 2020-21 from 52% in fiscal 2019-20.

We have maintained our leadership position as the top arranger of rupee bonds over the last 14 years. We mobilised around `18,000 crores in TLTRO, by participating in three auctions at the start of year and invested the entire funds across high-rated corporate issuers, thereby helping to build new client relationships.

During the year, we consolidated our overseas business through our branch operations in Dubai, Singapore and Gift City, India in line with our strategy to focus on Indian corporates with global operations. Our overseas book continues to be dominated by high-rated Indian conglomerates and PSU entities with major part of growth being driven by our GIFT City branch exposures.

Over the last two years, we have tightened governance and risk culture in the Wholesale Bank with respect to coverage and credit underwriting, products and processes. We have institutionalised the activities which we will refrain from doing and would look to price and document risk appropriately. We continued our cautious stance on taking long-term project execution risk in the infra space and green field projects, except in certain segments to certain entities like large corporate groups or PSUs.

We continue to maintain rigour around risk management and have reduced exposure to accounts wherever we saw stress emerging. Our stress book of BB and below rated accounts has moderated to 1.09% with 100% of restructured corporate book classified as BB and below.

In the corporate book, we continued to take prudent actions around asset quality and provisioning. We have further increased the provisioning on standard investments, red flagged accounts, and fully provided for security receipts during the year. Our strong balance sheet position with additional provisions of 1.95% on standard assets, places us well to counter the unlikely risks in the current uncertain environment.

The budget announcements related to extension of performance linked incentive scheme to larger set of sectors, continuation of tax breaks to new companies, ease of doing business, along with geo-political factors have led to marginal shift in global supply chains, thereby aiding growth in certain sectors like pharma, electronics, automotive, etc. I do hope that acceleration in vaccination rollout and continued support from fiscal and monetary authorities would help the businesses to tide over this difficult period. The recent surge in infections caused by second wave of COVID-19 may delay the capex recovery to late fiscal 2021-22 and early 2023.

I continue to remain confident that the changes we have implemented in Corporate and Commercial Banking businesses towards building a granular and diversified book, along with our ability to offer One Axis to our clients would help us gain market share and build a sustainable and profitable Wholesale Bank.

Warm Regards,

Rajiv Anand

Executive Director - Wholesale Banking