Retail Banking Annual Report 2022–23

As a key vector of the GPS strategy, we are on a journey to create one of the best and premium retail banking franchises in India. During the year, we made good progress towards the same with improvement in quality of our deposit franchise, sustained momentum in retail loan book with strong growth in our focus segments like Rural and Small Business Banking, and leadership in cards, payments and wealth management businesses. Our CASA deposits grew 21% y-o-y, Retail loan book (constituting 58% of overall Bank advances) grew 22% y-o-y on the back of all-time high disbursements, credit card spends touched new yearly highs and Retail fees grew 33%, contributing 68% to the overall Bank fee income.

Further, the successful acquisition of Citibank India Consumer Business, a landmark in the Indian banking industry, strongly positions us for accelerated premium market share growth.

Granularisation of Liability Franchise with Sharp Improvement in Quality of Deposits

We have significantly improved the quality of our liability franchise led by focus on granularisation and deepening of deposits base. Our micro market focused strategy backed by analyticsdriven market scoping continues to play out well. In the last three years, we have steadily gained higher market share across districts with over 33% increase in number of districts with deposits market share of over 5%. We added 10.8 million new liability relationships with ~4.7 million new SA relationships in fiscal 2023, 8% higher than the previous year.

We continued to work towards leveraging our relationships with leading corporates to gain a higher share in the salary segment. We saw 33% y-o-y increase in new salary labels acquired and added 1.8 million new salary accounts with 23% y-o-y higher NTB (New to Bank) balances from them, a reflection of growth in both quality and quantity.

During the year, the Branch Banking team worked closely with different parts of the Bank – Bharat Banking, Commercial Banking, Government Coverage among others to drive higher growth in granular deposits.

As part of our various planned interventions to increase the share of LCR-accretive retail deposits, we delivered higher growth in deposits from retail and small business segments that resulted in nearly 550 bps reduction in outflow rates.

Strengthened our Positioning in Wealth Management in Line with Bank's Premiumisation Strategy

Premiumisation of the liabilities franchise continues to be an important imperative for the Bank. Our focus on offering ‘right fit’ solutions and new product propositions like ‘Priority Banking’ programme, ‘Ultima Salary’ and ‘Silver Linings’ with several value-added features helped us garner new premium relationships. The share of premium segments in our retail SA franchise improved by 870 bps y-o-y to over 55% led by our focus on premiumisation and the recent acquisition of Citibank India’s Consumer Business portfolios.

Our wealth management business ‘Burgundy’ is among the largest in India with combined assets under management of H3.6 trillion across ~2.5 lakhs affluent and ultra-HNI clients. Our seasoned team of 700 RMs and wealth specialists with vintage of 12 to 18 years, strong research capabilities across asset classes and robust and modular open API architecture have helped us build deep relationships with the clients. ‘Burgundy Private’ proposition that we launched three years ago crossed the milestone of H1.37 trillion in assets under management. We have built a truly premium proposition with 30 of the top 100 richest Indians as per Forbes list banking with us on the Burgundy Private platform.

NRI segment has been of strategic focus at Axis. In the past year, we have revamped our digital acquisition journey, launched UPI for NRI customers, and introduced Portfolio Investment Scheme services through digital channels. The faith of our customers is evidenced by the strong acquisition momentum.

During the year, we continued to leverage our ‘One Axis’ capabilities across Axis Group to provide bespoke wealth management services along with the power and stability of a leading Bank to our private banking clients. Our ‘3i’ approach – ‘integrity’ in all our customer interactions, ‘intellect’ and ‘innovation’ in our product offerings and solutions continues to be recognised externally, with the Bank winning the award for ‘Best Private Bank for Client Acquisition, Asia’ at the PWM Wealth Tech Awards 2022 organised by Financial Times, UK and ‘Outstanding Marketing Campaign by a Private Bank/Family Office’ at the Annual Global Private Banking Innovation Awards by Global Private Banker, Singapore.

Acquisition of Citibank India Consumer Business has Further Accelerated our Growth Ambitions

The successful completion of acquisition of Citibank India Consumer Business during the year provided us access to large, affluent and profitable consumer franchise, in line with our ambition to become a premium retail franchise.

The acquisition provided us a quality credit card franchise with one of the highest wallet shares in premium cards, which is complementary and has strengthened our presence in top 8 metros. We have consolidated our position in the credit cards business with our market share improving by 450 bps to 16.3% in terms of credit card advances and nearly 20% addition to the cards in force base.

The acquisition of sizable premium and granular customer base also strengthened our liability franchise with over 100 bps improvement in CASA and access to over 1,600 Suvidha corporate relationships. In wealth management business, we got access to highly affluent Wealth customer base that would accelerate our growth ambitions.

We believe that the Citi’s affluent clientele backed by global best practices in client servicing and operations will not only complement Axis Bank’s strong product propositions but also offers us huge cross-sell potential to further deepen relationships leveraging our strong platforms. The clients will now be able to benefit from our combined ‘One Axis’ proposition, avail an even wider product offerings, and Bank seamlessly using our wider branch and ATM network. There are significant synergies that we expect to realise over the coming quarters to deliver higher value to customers.

Delivered Strong Growth across our Focused Retail Segments

Our retail lending franchise continues to deliver sustained growth across segments with higher growth across higher yielding focus segments. We delivered strong performance with retail disbursements touching new all-time high in fiscal 2023 that led to strong growth in retail advances, which now constitute 58% of the overall Bank advances.

We continued to focus on delivering profitable growth led by business-mix optimisation towards higher yielding loans within secured segment. For instance, within the mortgage segment, we grew Loan against property and affordable home loans faster than the home loan and in wheels, the used car vehicle loans have grown substantially in the last few years. The rural and small business banking loan portfolios delivered strong y-o-y growth of 26% and 50%, respectively.

Further, we continue to leverage our best-in-class data analytical capabilities around proprietary database programmes, alternate data, KTB (Known to Bank) scorecards and hyper personalisation to drive higher growth across our unsecured retail product segments. During the year, the Bank’s database programmes contributed 66% of Personal Loan sourcing and 79% of new cards sourcing. The Bank won ‘Trailblazer in Next Generation Technology Award’ for use of Artificial Intelligence & Machine learning in 2022.

In line with our strategy on building ecosystems, we launched a co-branded home buyer ecosystem, entered into partnerships and MOU with several auto manufacturers to provide financing to dealers and customers. The acquisition of Citi Consumer Business, and our early leadership in Universal Underwriting and Account Aggregator framework provide us an opportunity to further cross-sell and drive growth in Retail loan book.

Bharat Banking – Our Distinctiveness Initiative Continues to Scale Up Well

Our strategy to drive higher business growth and increase market share from rural and semi urban (RuSu) markets made strong progress during the year. As a result of our focused initiatives across products, processes and partnerships, we achieved the highest ever monthly disbursement in March 2023 across all the major product segments, 26% growth in rural advances and a 15% y-o-y growth in deposits from ‘Bharat’ branches. The growth has been across all the major product lines backed by PSL asset accretion and lower credit cost.

The Bharat Banking vertical continues to work together with other parts of the Bank to provide customer-centric solutions related to products which largely cater to agri, rural and farm to fork supply chain segments while driving deeper penetration with other Retail Assets and liability products in the RuSu markets.

We have scaled up the distribution footprint in this segment to 2,137 branches complemented by a large CSC (Common Services Centers) network of 60,600+ VLEs (Village Level Entrepreneurs), that grew 50% y-o-y. We continue to significantly expand the partnership ecosystem & pursue co-lending opportunities as we collaborated with marquee names such as India Post Payments Bank, Airtel Payments Bank, ITC, etc. to further penetrate rural supply chains and enhance our distribution.

Digital continues to be the key theme to build distinctiveness by providing best in class customer journeys and giving strong impetus to the low-cost and customer-centric business model. We launched eKYC based CASA platform, enabling deepening of our liabilities’ products through partnership ecosystem. We also went live with five partners on digital co-lending platform that will provide access to new customer segments and augment the PSL portfolio.

We continue to focus on building an array of ‘Bharat centric’ products for better segmental coverage and penetration. We launched and scaled up several new propositions to enhance our offerings on the retail and institutional side such as used tractor financing, agri-infra financing, lease rent discounting, Farmer Producer Organisation (FPO) financing, etc. We also enabled several policy changes and process enablements across product categories such as widening collateral coverage to facilitate credit flow in deep markets. The Bank’s first branch with a new rural-centric design went live in fiscal 2023 and we intend to replicate the same in order to significantly improve our visibility in RuSu markets.

We are confident of continuing the growth momentum and creating a strong distinction in RuSu markets backed by our deep distribution, comprehensive product suite, investment in digital initiatives, robust partnership ecosystem, and proven expertise in lending to RuSu customers.

Improved Productivity and Customer Experience across the Channels

We continue to follow calibrated branch expansion strategy with emphasis on improving the productivity of our relationship manager and sales channels. Over the past 3 years, we have enhanced the efficiency across the channels and segments led by multiple transformational projects and institutionalisation of daily operating rigour and rhythm.

Project Triumph has been instrumental in improving the productivity of liability sales channel, deepening and improving the quality of deposits. On the retail assets side, projects like Unnati and SBB Sankalp have been instrumental in improving TAT and simplifying the loan origination journeys while the projects Zenith and Kanban have helped to transform the customer life cycle management in cards and merchant acquiring businesses. As part of our ‘Branch of the Future’ initiative, over 67% of customer service requests are now fulfilled digitally.

Our significant investments in Digital and Technology towards building curated digital onboarding journeys, upgrading the core cards platform, enabling the front line staff with varied digital tools on BYOD platform, etc. have started making impact.

Digital continues to be a distinctiveness area for driving growth in retail assets and liabilities. In fiscal 2023, 48% of the individual retail term deposits by value were sourced digitally. On the assets side, 55% of the personal loans, 48% of the unsecured business loans and 30% of two wheeler loans were disbursed end to end digitally as part of Maximus 24x7 digital lending.

We believe that our omnichannel presence via our strong 4,900 branch network, our highest rated ‘Axis Mobile’ app which for us is the largest branch, Axis Virtual Centre (AVC) channel with over 1,500 VRMs, strong network of CSC VLEs and business correspondents, along with strong partnerships across products would help us to continue serving our customers ‘Dil Se’.

Gained Market Share in Cards and Payments Aided by Strong Product Propositions and Strategic Partnerships

During the year, we continued to witness strong traction across credit card issuances, spends and advances. We issued 4.2 million credit cards in fiscal 2023, highest ever for the year led by our best-in-class product offerings, strong data analytics and partnerships led KTB (Known to Bank) partnership strategy. Our co-branded card ‘Flipkart Axis Bank Credit Card’ crossed yet another significant milestone to end the year with 3.58 million cards in force, making it one of the fastest growing co-branded portfolios since its launch in July 2019. During the year, we also entered into a strategic partnership with Indian Oil, Samsung and others to drive higher customer engagement.

We continue to invest in improved sourcing and offer propositions like Wednesday Delights, Grab Deals and others to deepen spends. The credit card spends for the year grew 63% y-o-y to touch new yearly highs of `1.35 lakh crores. Our ‘Axis Mobile’ app that has the highest rating of 4.8 on Google Play Store with over 2 million+ reviews, continues to drive growth in card advances. Our card advances for the year grew by 97% aided partly by the acquired Citi Card advances portfolio.

In the merchant acquiring space, we continue to be the second-largest in the country with an installed capacity of over 1.4 million terminals. We gained an incremental market share of 26% in fiscal 2023 led by our ‘One Axis’ approach towards empowering merchants with innovative offerings and integrated ecosystem solutions like Digital Dukaan and MicroPay that we launched during the year.

In the UPI payments space, we continue to partner with new fintech players to drive higher payment volumes. We have more than doubled our customer VPA (Virtual Private Addresses) base in last fiscal to 644 million and continue to maintain our strong positioning with 17% market share as Payer PSP by volumes.

Our investments towards building a robust IT infrastructure and upgrading capabilities have helped us to achieve one of the lowest technical decline rates in the industry.

Our Aspiration is to Set a New Gold Standard in Consumer Banking in India

We have over the years built a strong risk management architecture in Retail with well-defined risk appetite and retail lending policies across product segments. The asset quality in Retail remained stable with low net slippages and decline in net NPA ratio by 8 bps y-o-y to 0.49%.

The customer demand has been resilient even as higher interest rates pose a near-term threat. The retail growth momentum in India continued to improve through the year to inch closer to the pre-pandemic highs led by higher customer discretionary spending. While the retail banking sector loan growth was broad based across segments, the non-mortgage sector loan growth improved considerably led by credit cards, customer durables, auto loans and personal loans.

We believe the trend of rising consumerism and urbanisation in India with better access to credit will continue to drive strong growth in retail business. Further, the banks with large distribution network, better technological capabilities and customer experience will continue to gain higher market share. We, at Axis Bank, are well placed to leverage these trends on back of our extensive reach, strategic partnerships and our leadership in data analytics. With focus on customercentricity, innovation in product offerings, deeper presence in RuSu markets, higher resource productivity led by improvement in operational processes and digital prowess, our aspiration is to set a new gold standard in Consumer Banking in India.

Our strong performance in fiscal 2023, gives us confidence that we are on track to achieve our strategic objectives of sustainable and profitable growth while strengthening our market leadership across our key businesses.

Warm Regards,

Ravi Narayanan
Group Executive – Retail Liabilities and Branch Banking

Sumit Bali
Group Executive – Retail Lending and Payments

Munish Sharda
Group Executive – Bharat Banking

Arjun Chowdhry
Group Executive – Affluent Banking, NRI, Cards and Payments