Axis Bank Ltd (AXISBANK) Q4 2022 Earnings Call Transcript

Axis Bank Ltd (NSE: AXISBANK) Q4 2022 Earnings Conference Call dated Apr. 28, 2022

Corporate Participants:

Amitabh Chaudhry — Managing Director and Chief Executive Officer

Puneet Sharma — Chief Financial Officer

Ravi Narayanan — Group Executive of Retail Liabilities, Branch Banking and Products

Amitvikram Talgeri — Chief Risk Officer

Sumit Bali — Group Executive, Head of Retail Lending

Munish Sharda — Group Executive and Head of Bharat Banking

Analysts:

Mahrukh Adajania — Edelweiss — Analyst

Rohan Mandora — Equirus — Analyst

Adarsh Parasrampuria — CLSA Limited — Analyst

Kunal Shah — ICICI — Analyst

Parag Jariwala — White Oak — Analyst

Jai Mundhra — Batlivala and Karani — Analyst

Nilanjan Karfa — Nomura — Analyst

Krishnan — ASV — Analyst

Prepared Remarks:

Operator

Ladies and gentlemen, good day, and welcome to the Axis Bank conference call to discuss the Q4 and financial year ending results as on 31st March 2022. Participation in this conference call is by invitation only. Axis Bank reserves the right to block access to any person to whom an invitation has not been sent. Unauthorized dissemination of the contents or the proceedings of the call is strictly prohibited, and prior explicit permission and written approval of Axis Bank is imperative. [Operator Instructions] Please note that this conference is being recorded. On behalf of Axis Bank, I welcome all the participants to the conference call once again. On the call, we have Mr. Amitabh Chaudhry, MD and CEO; Mr. Puneet Sharma, CFO; Mr. Rajiv Anand, Deputy MD; Mr. Ravi Narayanan, Group Executive and Head, Branch Banking, Retail Liabilities and Products; and Mr. Sumit Bali, Group Executive and Head Retail Lending and Payments. I now hand over the conference to Mr. Amitabh Chaudhry. Thank you, and over to you, sir.

Amitabh Chaudhry — Managing Director and Chief Executive Officer

Thank you, Nirav. Good evening, and welcome, everyone. Financial year ’22 was yet another extraordinary year. You could say these kind of years are coming thick and fast now. We had the impact of wave two in the first half, a strong rebound thereafter and macroeconomic headwinds because of war and rising inflation by the time we ended it. At Axis Bank, we took these uncertainties in our stride and viewed them as opportunities to redraw the baseline in multiple business segments. We gained market share in them, and we made significant progress on our journey of distinctiveness. This has been possible through the collective efforts of our employees and partners who served the needs and aspirations of our customers. I will share with you how we have fared on the execution of our strategy in the years gone by. Puneet will give you the details of the financial performance. We focused on the three core areas of execution to move forward on our GPS strategy: the first one was deepening a performance-driven culture; second was strengthening the core; and third was around building for the future. Let me now discuss each one of them in further detail. On deepening of the performance-driven culture. Growth has accelerated across the bank, driven by a culture of high performance and relentless execution. First, we have lifted the growth trajectory. Our CASA deposits have grown at a CAGR of 15% in the last three years and 16% year-on-year in financial year ’22, led by our focus on granularization and premiumization of deposit franchise.

On advances, we continue to grow faster than the industry with overall advances growing at 15%, while the growth in our focus segments, comprising mid-corporate, SME, small business banking and rural, has been higher at 17% CAGR in the last three years. On credit cards, we are seeing huge customer interest in our proposition. We have grown 26% over last year, and we issued a total of around 2.7 million cards during financial year ’22. We have gained significant incremental market share of 31% in 11 months financial year ’22 on merchant-acquiring business. We are the second largest merchant-acquiring bank in the country with an installed capacity of 9.52 lakh terminals. We have built our Burgundy franchise to be one of the top brands in wealth management space. We now have an AUM of INR2.6 lakh crores, growing at a strong 25% CAGR in the last three years. Second, we are improving our profitability metrics. Net interest income has grown at a CAGR of 15% in last three years despite the COVID challenges. PAT CAGR has been 41% in last three years. Our subsidiaries continue to deliver industry-leading performance and remain an integral part of our One Axis strategy. They delivered 51% CAGR in profits in the last three years, crossing INR1,195 crore mark and contributed 80 basis points to quarter four financial year ’22 annualized consolidated ROE of around 6.67% (sic) [16.67%]. I would like to reiterate that our aspirations are bigger, and we continue to work to raise our performance on margins. Third was around fostering a winning mindset.

There is a positive cultural change in the bank and in our ability to stand out in the market. This is reflected in Axis Bank delivering many industry firsts and winning external recognitions for its performance. During the quarter, we were awarded IFR Asia’s Asian Bank of the Year and the India Bond House Award for our breadth of coverage and depth of expertise in the Asian investment banking space. In Slide five of our presentation, we have listed our awards and achievements across various segments. The winning mindset is also seen in our business performance with multiple all-time highs that we have recorded during the year. New granular liability relationships acquired have continuously trended upwards over the last three years, touching new highs. In quarter 4, we opened 2.4 million liability relationships, up 30% year-over-year, taking the total accounts opened in financial year ’22 to new highs of 8.6 million, up 29% year-on-year. We added highest number of salary accounts during the year, 1.5 million new accounts with all-time high balance contribution from them, reflecting growth in both quality and quantity. On the wealth management side, we saw highest ever gross mutual fund sales of over INR21,200 crores and alternate investments of INR2,300 crores in the year. We issued our highest ever quarterly new credit cards at 1.1 million in quarter four in February ’22. We were the largest issuer of credit cards on net basis in the industry. We crossed a significant milestone of two million Flipkart Axis Bank credit cards in force. We also entered into a strategic partnership with Airtel that will help us to offer credit cards in various digital financial offerings to Airtel’s 340 million customers. There are more partnerships in the pipeline. Retail disbursements of Q4 financial year ’22 were highest ever for any quarter, growing 21% year-on-year. The acquisition of Citi’s consumer banking franchise further builds on this momentum and reflects our desire to win in our focus customer segments.

Our One Axis philosophy has been a key area of distinctiveness in the wholesale banking segment. In SME, we have seen highest ever contribution from new business underwritten during the year at 53%. Similarly in mid-corporate, we have seen high CAGR growth of 36% over the last two years. Our second pillar was strengthening the core. I start with building a strong balance sheet. Sustainability continues to remain the foundation of the bank’s GPS strategy. We have taken concrete actions towards strengthening our policies, processes and controls. Our legacy asset quality issues are firmly behind us as the numbers show. Bank’s asset quality is among the best-in-class. Net slippages declined by 0.42% and 1.15% on Q-o-Q and Y-o-Y basis, respectively, and credit cards declined by 0.12% and 1.16% on Q-o-Q and Y-o-Y basis, respectively. GNPAs, NNPAs and BB book are down by 244, 133 and 57 basis points, respectively, in the last three years at 2.82%, 0.73% and 0.75%. We hold cumulative non-NPA provisions of INR12,428 crores and standard asset coverage ratio of 1.77% among the highest in the industry with one of the lowest restructured portfolios of 0.52%. Our balance sheet buffers remain strong with PCR of 75%. The bank’s strong balance sheet and healthy capital with CET1 ratio of 15.24% ensures that we enter this cycle from a position of strength. Deepak Maheshwari, Bank’s Chief Credit Officer, played a key role to help us establish the right underwriting framework and credit culture in the wholesale bank over the last three years. We had persuaded Deepak out of his retirement to guide us on this journey. He would be moving on upon completion of the contract on 30th April. However, he will continue as a Board member of Axis Finance. We sincerely thank him and wish him the very best. He has built a strong team that will sustain our credit and risk culture. Second, on strengthening the core was around building our next-generation technology architecture.

Technology is at the core of future-ready Axis we are building. We continue to make significant investments in building digital and new age tech capabilities, invest in talent and work on transformation projects across our businesses. Our IT team strength has grown by 75% over the last 24 months with focus on modern engineering skills. Overall, our year-on-year tech spend has gone up by over two times. On cloud, our leadership continues. We have been the first among peers to create three landing zones, AWS, Azure and GCP, to support our multi-cloud strategy. We already have 55 plus of our critical applications on cloud. Our efforts to modernize the core received external recognition during the quarter with International Data Corporation recognizing the bank as Asia’s Best in Infrastructure Modernization Program at the 2022 Financial Insights Innovation Awards. We have built data stack 3, which is a cloud-based, real-time, flexible architecture covering structured and unstructured data. We now have a rich nudge library towards making customer journeys more impactful and personalized. Further through our initiative on universal underwriting, we are building capabilities to underwrite a significant section of the lendable population in India. Our third thing around strengthening the core was organization wide transformation projects to accelerate our GPS journey. We have 19 transformational projects being managed directly by our management committee members. The strong rhythm and rigor that we have built across our distribution engine, led by these transformation projects, are reflecting in our acquisition numbers. Now let me talk about building for the future. Investments to position ourselves favorably for the future continue. Digital continues to be an area of relentless focus.

The impact of this is now visible across the business segments. This quarter, we launched new digital lending programs, including account aggregator-based lending, usage of alternate database underwriting programs, etc. New products that we launched continue to see good traction. BNPL witnessed quarter-on-quarter growth of 50% in GMV for the quarter. Retention rates are very healthy at 70% plus. Digital Merchant cash advance, a new product we launched in quarter three this year targeted at small merchants, has witnessed 12 times quarter-on-quarter growth in terms of volumes. 68% of our FDs are opened digitally. We have launched new to bank FD opening on our platforms and also with our partners. We have now entered into over 80 partnerships at both product-specific level using APIs and white label banking. We have 300-plus APIs among the largest set of open banking APIs for external partners now. On UPI, our market share stood at 15%, and we managed more than 25 million transactions daily with amongst the lowest rate of technical declines for remitter transactions. We now have 5.6 billion non-Axis bank customers using our Axis mobile and Axis Pay apps. Our corporate digital Project Neo has made strong progress and the first journeys have gone live in quarter 4. Second pillar on building for the future was around bank-wide program to build distinctiveness.

During the year, we launched Sparsh, our customer experience transformation initiative. This is a multiyear program to embed customer obsession across the bank and building distinctiveness. The Bharat Bank initiative is running ahead of time line. The Bharat Bank segment delivered a strong 34% quarter-on-quarter growth in disbursements in quarter four financial year ’22. We also achieved highest ever monthly disbursement in March ’22 across all the major product segments. The bank is working towards expanding its footprint in rural and semi-urban geographies by using the existing BC network and leveraging the vast network of common service centers. Over 40,000-plus village-level entrepreneurs have been identified as business correspondents across 265 branches. ESG has bank-wide sponsorship. During the year, we saw an improvement in our ratings across assessment platforms like S&P, Dow Jones, MSCI and CDP. We featured in the prestigious FTSE4Good Emerging Index for the fifth consecutive year in 2021. During the year, we entered into USD300 million loan guarantee program with GuarantCo towards accelerating the E-Mobility ecosystem in India. Also, we recently signed an initial outlay of $150 million Partial Guarantee Facility Agreement with the Asian Development Bank to support supply chain financing with focus on ESG and priority sectors. Further, the bank has also committed affordable finance of up to $150 million through SAMRIDH, an initiative supported by the United States Agency for International Development towards strengthening India’s health care infrastructure. Before I conclude, let me touch upon the key financial highlights for the quarter. Puneet will, of course, provide detailed updates. On a sequential basis, our performance has been strong.

Key growth measures quarter-over-quarter are as follows: CASA growth of 7% period-end basis, deposit growth of 6% period end basis, retail assets loan growth of 9%, Bharat Banking loan growth of 34%, fee growth of 12%, core operating profit growth of 8% and PAT growth of 14%. This is all quarter-over-quarter. The above performance has been a direct outcome of our rigorous execution of GPS strategy over the past three years and the initiatives that I just highlighted in the earlier themes. In closing, we have strong momentum going into financial year ’23, and we will continue our steady upward movement on business and financial metrics. There is a positive cultural change within the bank. We remain optimistic and confident about our future. I’ll now request Puneet to take over.

Puneet Sharma — Chief Financial Officer

Thank you, Amitabh. Good evening, ladies and gentlemen. Thank you for joining us this evening. I’ll discuss the salient features of the financial performance of the bank for Q4 FY ’22 and FY ’22, focusing on our operating performance, capital and liquidity position, growth across our deposit and loan business, asset quality, restructuring and provisioning. We have consistently stated that we are focused on strengthening our core businesses and ensuring that our balance sheet is resilient across cycle. I’m happy to state that we have been able to deliver on both objectives. Amitabh spoke at length on the progress made on each of our businesses and transformation initiatives and key sequential metrics. My focus hence will be on our financial performance. Our operating performance is robust. Y-o-Y improvements are reflected through growth in net interest income, operating profits and PAT. On a sequential basis, business traction is visible through strong growth in granular retail fee, core operating profits and PAT. Net interest income for Q4 FY ’22 stood at INR8,819 crores, representing a Y-o-Y growth of 17% and a sequential quarter-on-quarter growth of 2%. INR83 crores of net interest income was prudently reserved as it related mainly to realized interest on an NPA investment account where principal is still outstanding, a contested arbitration order where interest has been awarded against the bank and some miscellaneous items. This has adversely impacted NIMs for the quarter by four basis points. NIM for Q4 FY ’22 stood at 3.49%, at the higher end of our indicated range last quarter of 3.45% to 3.5%. NIMs declined sequentially four bps and seven bps, respectively. Improvements in NIMs over the medium term will be driven by balance sheet mix shift from investments to loans and within loans, the currency, segmental and product composition towards better yielding assets, continued improvement in low-cost deposit base and the quality of our deposit franchise and reduced share of low-yielding RIDF bonds, at 3.54% of assets in March ’22, down from 4.75% of assets as at March ’21.

The improving liquidity franchise has resulted in cost of deposits declining 25 basis points Y-o-Y. The bank has been improving the risk profile of its loans. Our NII to — NII as a percentage to average risk-weighted interest-earning assets stands at 7.11%, improving 20 basis points Y-o-Y. Noninterest income for Q4 FY ’22 stood at INR4,223 crores, representing a Y-o-Y growth of 19% and a sequential Q-on-Q growth of 10%. Our fee income stood at INR3,758 crores, growing 12% Q-on-Q, 91% of our fee is granular. The fees for the quarter is after giving effect to some customer-focused actions taken by the bank, including reducing fee across many charge types, mainly in the retail liability area in Q3. Despite that, total retail fee grew 14% Y-o-Y and 14% Q-on-Q; fees on retail assets, excluding cards, grew 41% Y-o-Y, 16% Q-on-Q; fee from third-party distribution grew 23% Y-o-Y and 31% Q-on-Q; our transaction banking fee grew 11% Y-o-Y and 6% Q-o-Q; our Commercial Banking Business group fee grew 4% Y-o-Y and 38% Q-o-Q. Operating expenses to average assets stood at 2.17% for Q4 FY ’22 within our indicated range of 2.2%, that was called out last quarter, higher by 21 basis points Y-o-Y and 2% — two basis points sequentially. Operating expenses for the quarter stood at INR6,576 crores, growing 23% Y-o-Y and 4% sequentially. The sequential quarter-on-quarter increase in rupee crore expenses can be attributed to the following reasons: 47% of the growth is linked to volume, 51% to onetime expenses, 17% attributable to collection expenses. This has been offset by BAU and statutory expense savings by 15%. Onetime items for the quarter related to reclassification of provisions into operating expenses and the proposed Citibank acquisition-related expenses debited to the P&L. Our technology spends grew 56% Y-o-Y. Technology spend stands at approximately 8% of our total operating expenses. Staff costs increased by 13% Y-o-Y and declined 3% quarter-on-quarter.

We’ve added 7,500 people from the same period last year, mainly to our growth businesses and our technology teams. We have continued to maintain the social security code provisions. The cumulative social security code provision in the books of the bank now stands at INR225 crores. Other operating expenses grew 27% Y-o-Y and 7% Q-on-Q, mainly attributable to higher business volumes, higher collection expenses, onetime transaction expenses relating to the business purchase transaction. The Y-o-Y increase in rupee crores on operating expenses can broadly be bucketed to the following reasons: 38% is volume linked, 24% is attributable to investing in the future growth of the franchise and our technology-related spends, 11% is attributable to collection expenses and statutory expenses and the balance 27% constitute BAU growth. Operating profit for Q4 FY ’22 was INR6,466 crores, growing 13% Y-o-Y, 5% Q-on-Q. Core operating profit for Q4 FY ’22 is 6,235 crores, growing 9% Y-o-Y and 8% Q-on-Q. Provisions and contingencies for the quarter were INR987 crores, declining 54% Y-o-Y and 26% Q-on-Q. The provisions and contingencies for Q4 FY ’22 include prudent additional provisions of INR576 crores. The bank has not utilized any of its COV19 provisions in the current quarter. This is entirely prudent and in no way a reflection of the credit risk on the books of the bank. The annualized credit cost for Q4 FY ’22 is 0.32%, declining 116 basis points Y-o-Y and 12 basis points Q-on-Q. Profit after tax stood at INR4,118 crores, growing 54% Y-o-Y and 14% Q-on-Q. Annualized Q4 FY ’22 ROE stood at 15.87%, improving 415 basis points Y-o-Y and 168 basis points Q-on-Q. The strength of our balance sheet is reflected through the cumulative non-NPA provisions at 31st March 2022 at INR12,428 crores, comprising COVID-19-related provisions of INR5,012 crores, restructuring provisions of INR1,411 crores which are at first bucket NPA rates and weak assets and other provisions of INR6,005 crores.

Our provision coverage, all provision NPA plus non-NPA divided by GNPA, stands at approximately 132%, improving 1,188 basis points Y-o-Y and 212 basis points Q-on-Q. The bank is well capitalized in carrying adequate liquidity buffers. Our total capital adequacy ratio, including profits for 12 months ended 31st March 2022 is 18.54% and our CET1 ratio is 15.24%. The prudent COVID provision translates to a capital cushion of 60 basis points over and above the reported capital adequacy. Our average LCR ratio for the quarter was 116%, increasing sequentially by approximately 150 basis points Q-on-Q. Our excess SLR stands at INR96,190 crores. The risk-weighted assets of the bank as at 31st March 2022 stands at 61% compared to 63% as at December 2021 and 64% as at March 2021. This improvement in RWA is reflective of the quality of the business being done by the bank. Growth across our liabilities and loan franchise. Amitabh discussed the strong progress made on the liability franchise in his opening remarks. Please refer Slide 21 and 22 for further details. Our overall loan book grew 15% Y-o-Y and 6% sequentially. The loan book continues to be balanced with retail advances constituting 57% of the overall advances, corporate loans at 32% and CBG at 11%. The retail book represents healthy characteristics with 80% of the retail book being secured. Retail loan book grew 21% Y-o-Y and 9% sequentially, led by secured products like home loans growing at 18% Y-o-Y, LAP at 29% Y-o-Y and our small business banking business growing at 60% on a Y-o-Y basis. Disbursement to unsecured products continued to grow with personal loan disbursements growing 23% Y-o-Y and 24% Q-on-Q.

Wholesale Banking. We have progressed well in our endeavor to build a profitable and sustainable corporate bank. The wholesale book grew 4% Y-o-Y and was flat quarter-on-quarter. Details of rating composition, incremental sanction quality are set out on Slide 41. We continue to have strong positioning in GST and RTGS payments with the market share of 9% — approximately 9% each. The offshore wholesale advances, which are largely trade finance related, grew by 42% Y-o-Y. The growth in our overseas corporate book is primarily driven by our GIFT City branch exposures. 96% of the overseas standard corporate loan book in GIFT City branch is India linked and 94% is rated A and above. Our commercial banking book grew 26% Y-o-Y and 13% sequentially. Our commercial banking card deposits on a quarterly average balance basis grew by 25%. The overall fee from the CBG business increased 38% sequentially. CBG customers contributed 24% to our Burgundy franchise in terms of Q4 sourcing. Each of these reflect the quality of the strong relationship led franchise we are building. Our ECGLS (sic) [ECLGS] share is low and dominantly to ECLGS one and 2. Asset quality metrics in the CBG segment have held up well with net slippages of INR85 crores, negligible restructuring and substantially improved provision cover for this segment to 75% as of March 2022 from 52% at the end of March ’20. Coming to the performance of our subsidiaries. Detailed performance of our subsidiaries is set out on Slide 70 to 76 of the investor presentation. The One Axis strategy is playing out well. Subsidiaries contributed 80 bps to the consolidated Q4 FY ’22 annualized ROE of 16.67%. The domestic subsidiaries reported a net profit of INR1,195 crores, up 44% Y-o-Y. This translated into a return of investment of 54%. Axis AMC has been one of the fastest-growing AMCs in the last three years with average AUM growth of 32% and 43% in FY ’22 and the last three years, respectively. Axis AMC full year PAT grew 47% to INR357 crores.

Axis Finance delivered strong growth on a full-service customer-focused franchise offering retail as well as wholesale lending solutions. In FY ’22, disbursements grew 67% Y-o-Y. Around 31% of these disbursements are from the retail segment, with the retail book at 33% of total loans, up from 3% in the last two years. Within wholesale focus remains on well-distributed granular book. 75% of the corporate book is A- and above in Axis Finance. Axis Finance’s book quality continues to be strong with a net NPA of 0.46% and negligible restructuring commendable for any NBFC in this space. Axis Finance’s FY ’22 PAT grew 72% to INR364 crores, with an ROE of 20% and a healthy capital adequacy ratio of 20%. Axis Capital continues to maintain its position amongst the top ECM segment. It completed 44 ECM deals. Its PAT stood at INR200 crores, up 20% Y-o-Y. ROE improved from 16.4% to 32.8% in the last three years. Axis Security. The broking revenues of Axis Securities grew 36% and 56% for Q4 and FY ’22, respectively. Its FY ’22 PAT was up 40% and ROE improved from 15.5% to 38.7% in the last three years. Our direct exposure to Russia and Ukraine domiciled companies and students studying in these geographies is negligible and stands at an absolute value of INR21 crores. Overall asset quality has been improving sequentially for the bank, as we had indicated last quarter, the GNPA and NNPA and PCR ratio for the bank and segmentally for retail, SME and corporate are provided on Slide 59. The GNPA at 2.82%, improved 88 bps Y-o-Y and 35 bps Q-on-Q.

Net NPA at 0.73%, improving 32 bps Y-o-Y and 18 bps Q-on-Q. At March 31, 2022, we have nil net exposure to ILFS entities, the three Future entities, SREI entities that are being reviewed by RBI. Healthy provision cover of 75%, improving by 237 basis points Y-o-Y and 269 basis points Q-on-Q. Gross slippages for the quarter were INR3,981 crores, lower by 25% Y-o-Y and 4% sequentially. Gross loan slippage ratio for the quarter stood at 2.38%, improving 121 basis points Y-o-Y and 21 basis points Q-on-Q. For the quarter, 54% of the gross slippages are attributable to linked accounts of borrowers, which were standard when classified or have been upgraded in the same quarter. The bank has a rule based write-off policy for its retail and CBG business. The net slippages for the quarter for the bank as a whole would be negative INR502 crores, adjusted for recoveries and upgrades of INR3,763 crores and recoveries from written-off accounts of INR719 crores. Consequently, the net slippage — net NPA slippage ratio for the — net NPA slippage for the quarter in rupee crore terms is INR218 crores, declining 75% Q-on-Q and 88% Y-o-Y. Net slippage ratio for the quarter on an annualized basis is 0.13%, improving 115 basis points Y-o-Y and 42 basis points Q-on-Q. On a segmental basis, retail net NPA slippage is INR193 crores, CBG at INR85 crores. And for the WBCG segment, we have negative net slippages of INR60 crores.

Standard COVID restructuring under one and two stands at INR4,029 crores and is 0.52% of GCA, one of the lowest in the industry. Overall provision cover for retail for restructured loan stands at 24%, with 100% provision for unsecured restructure retail loans. We collected 4% from the restructuring book during H2 FY ’22. BB & Below for the bank declined 26% Y-o-Y and 18% sequentially. Upgrades and recoveries in the quarter aggregated to INR1,671 crores, constituting 15% of the opening BB & Below book. Downgrades for the quarter were INR372 crores. More details of the BB & Below and restructuring have been provided on Slide 60 of our investor presentation. For the full financial year FY ’22, the key numbers are as follows: NIM stands at 3.47% as compared to 3.53% previous year. NII stands at INR33,132 crores, Y-o-Y growth of 13%. Fee stands at INR13,001 crores, Y-o-Y growth of 22%. Operating profit at INR24,742 crores, Y-o-Y growth of 7%. Cost to assets at 2.17%. Credit cost at 0.72%, improving 96 basis points Y-o-Y. PAT stands at INR13,025 crores, increasing 98% Y-o-Y. GNPA and NNPA declined by 88 and 32 basis points, respectively, on a Y-o-Y basis. ROE of 12.91%, improved 536 basis points Y-o-Y. As I close, we summarized the bank’s journey so far and the broad outlook on key performance drivers. Our balance sheet resilience is visible through strong capital adequacy, legacy NPA issues behind us with net NPA at 0.73%, limited restructuring at 0.52%. Consistency and quality of the granular liability growth is visible.

Average CASA to average deposits ratio has improved to 43%. On a month-end balance basis, it’s up at 45%. Growth in healthy granular businesses, both secured and unsecured. Focused segments like retail and within wholesale, SME and mid-corporates with better RAROC continue to grow faster at 21%, 26% and 45%, respectively. Consolidated Q4 FY ’22 annualized ROE is at 16.67%, domestic subsidiaries now contribute 80 basis points to consolidated ROE. We remain committed to invest for our long-term future and would not hesitate to spend more on transformation projects, upfronting technology investments and granular growth. This could then lead to negative impact on cost to asset ratio in the short term. We continue to closely monitor two key variables: geopolitical risk and its first and second order impact on inflation, liquidity and growth and any potential future COVID waves and resultant government policy action there on. We would be glad to take your questions now. Thank you.

Questions and Answers:

Operator

[Operator Instructions] First question is from the line of Mahrukh from Edelweiss Financial Service. Please go ahead.

Mahrukh Adajania — Edelweiss — Analyst

My question is — so I have three questions.

Operator

Mahrukh, sorry to interrupt you. Your audio is not very clear. May I request you to speak through the handset.

Mahrukh Adajania — Edelweiss — Analyst

Yes, can you hear me now?

Operator

Not that clear, ma’am.

Amitabh Chaudhry — Managing Director and Chief Executive Officer

Go ahead, we’ll try to decipher it. Please go ahead.

Mahrukh Adajania — Edelweiss — Analyst

Yes. So my first question really is that in terms of your cost to asset ratio, the guidance you had given on stand-alone numbers of exit rate of 2% around in 4Q ’23. Is that still applicable?

Puneet Sharma — Chief Financial Officer

Mahrukh, thank you for your question. Yes, we had indicated previously that we will exit FY ’23 at a 2% cost to assets ratio. We’ve updated our commentary on the cost to assets. And like I said earlier in my opening remarks, we believe that this is the right time to invest for the long-term future of the franchise and make sure that we spend the right amount of money to deliver our transformation projects and get to upfronting our technology investments to support the granular growth you are seeing through the last few quarters. And therefore, we do expect in the short-term expenses to increase. As of now, we are moving away from the 2% exit guidance that we have previously provided. And we are — we will guide at a future date on what that number could be. But as on date, we are not offering updated guidance to the 2% number.

Mahrukh Adajania — Edelweiss — Analyst

And my last question is on your transfer of standard assets to ARC. Could you tell us what sector?

Puneet Sharma — Chief Financial Officer

Mahrukh, we’ve not transferred standard assets to ARC. We have one transfer, which is an NPA of INR215.78 crores, that we sold to an ARC in the quarter. That NPA was fully provided prior to sale, and we have an aggregate realization of INR63.4 crores against that sale. So that’s net accretive to P&L. That is the only asset we have sold to an ARC.

Mahrukh Adajania — Edelweiss — Analyst

Okay. And just to repeat what you said SREI and Future have our net exposure of 0 in your book, correct?

Puneet Sharma — Chief Financial Officer

Yes, Mahrukh, that would be correct.

Operator

Mahrukh, do you have any follow-up questions?

Mahrukh Adajania — Edelweiss — Analyst

No.

Operator

[Operator Instructions] The next question is from the line of Rohan Mandora from Equirus. Please go ahead.

Rohan Mandora — Equirus — Analyst

Hello, sir. Yeah, thanks for the opportunity. Sir, in the opening comments, you indicated that the NIM expansion incrementally will be driven by mix changing on the asset side as well as some advances to — some investment to advances. So sir, if I do back of the calculation based on the LCR at your disclosing of 116%, there’s a potential of eight to 10 basis points of NIM expansion there. And other than that, on the loan mix side, how do we envisage the NIM expansion coming? So like which are the segments where we will look to grow faster? And also, would we look to take certain measured credit risk to increase this? So that’s the first question.

Puneet Sharma — Chief Financial Officer

Thank you for the question. Two parts to the response, which is our focus segments as we look to grow on the wholesale side, we’ve called out is the mid-corporate segment. We’ve already delivered strong sequential quarter growth on the Commercial Banking segment that we have. So on the wholesale side, those would be the two segments that we will continue to look to grow in a granular fashion. On the retail side, we have previously said that we are comfortable now taking on incremental unsecured exposure. That should be NIM accretive. But I just want to clarify that all of our incremental NIMs will be accretive even on a risk-adjusted basis. So it is not that we will add NIM and add credit cost on a net risk-adjusted basis, we will see an accretion to the P&L. That will be the loan segment shift that we alluded to in the opening comments. Further, we could potentially also have a currency composition shift, where the rupee growth — rupee book grows faster than the dollar book accreting to NIM has been moved forward. So those will be the asset side NIM drivers other than our RIDF book reduction that we spoke of. So those are the three drivers to the asset side and layman yield improvement.

Rohan Mandora — Equirus — Analyst

Sure, sir. Sir, second was on the savings deposit. If you look at the number of accounts that we have grown year-on-year, that’s almost 35% increase. But if you look at the retail balances, that grown up by 16%. So if you can share some details on how is the customer profile in terms of new accounts opened? And also, what is the average balances there vis-a-vis the entire book average balance sheet in the savings account?

Ravi Narayanan — Group Executive of Retail Liabilities, Branch Banking and Products

Thanks for the question. I think the way we look at savings account is that any acquisition that we do during the year as always a phase lag in terms of how they build up balances. The approach to the savings book is not to focus too much on the account, but the customer who is behind that account. And our approach is to see that we kind of look at it in terms of product penetration that we want to do with them. That is reflected in the kind of profile of customers that we want to acquire. And as you would have heard, Amitabh and Puneet talk of, we are trying to move towards a profile which is also inclusive of the premier segments. And therefore, there is some uptick move in terms of the premiumization that we are doing. And that gets reflected in the continuous growth that we are seeing in terms of the ticket sizes that are available. The savings account is also contributed towards the salary book. That is something that we are using as one of our focus areas as we go into doing some of the transformation projects that we are doing. And therefore, a combination of how we profile customers, how we scope the catchments in which our bank branches are and look at including the premier segments also, plus an overlay of opportunities of salary corporates that we are catering to. So all this combines together to help us look at savings accounts.

Rohan Mandora — Equirus — Analyst

Sure, sir. And last one data keeping question. How are you pacing the PSL? And what will be the share of total deposits in the Burgundy AUM?

Amitabh Chaudhry — Managing Director and Chief Executive Officer

So as far as PSL is concerned, this year we have met the PSL requirements for the second year in a row across all the categories. Obviously, whatever money we spend in buying certain certificates have obviously been taken through the P&L. We could not understand the second part of your question. You’ve said some other questions also.

Rohan Mandora — Equirus — Analyst

What is the total deposits within the Burgundy AUM?

Puneet Sharma — Chief Financial Officer

We don’t disclose that amount separately. We disclosed the Burgundy AUM on a consolidated basis. The Burgundy proposition and its delivery are set out on Slide 37 of our investor presentation.

Operator

The next question is from the line of Adarsh from CLSA. Please go ahead.

Adarsh Parasrampuria — CLSA Limited — Analyst

A couple of questions. One on the retail TD momentum, can you explain what’s happening? It’s still quite sluggish, slow large part of the growth being funded by the…

Amitabh Chaudhry — Managing Director and Chief Executive Officer

Adarsh, we are struggling to understand, can you come closer to the phone? We’re catching only bits of what you’re asking.

Adarsh Parasrampuria — CLSA Limited — Analyst

Sorry, I’ll try and repeat that. So the question…

Amitabh Chaudhry — Managing Director and Chief Executive Officer

Yes, go ahead. Much better. Please go ahead, yes.

Adarsh Parasrampuria — CLSA Limited — Analyst

Yes. The question was what’s happening in the retail TD, the momentum has just been too sluggish in the last few quarters? A good part of the growth has been funded…

Ravi Narayanan — Group Executive of Retail Liabilities, Branch Banking and Products

So I think — Adarsh thanks. What we are trying to do is look at retail TD as a vector where we are trying to address constitution-based approach. Our entire effort through the last couple of years has been to correct our approach towards the individual side. And while it is slow, but there has been some stock corrections on the constitution side that we have been parallelly doing. And a combination of that, hopefully, as we go forward, focus on the individual and small business elements, we’ll see us getting an improvement over the next few quarters. So that’s the way I would put it. So it’s a part correction as well as increased focus which is going to take us there.

Adarsh Parasrampuria — CLSA Limited — Analyst

Sir, can you tell me what correction like what’s the part that you felt needed a correction? And how long is that journey? Because it’s like one of the most important numbers that we were highlighting and kind of been quite sluggish this year.

Ravi Narayanan — Group Executive of Retail Liabilities, Branch Banking and Products

No, so the correction is based on the fact that our past few years. As we started this journey a couple of years back, our effort had been to ensure that we move from what we call as constitution-based non-retail term deposits to individual focus term deposits. And our product penetration on the term deposits in the individual space, as I mentioned in the earlier question on savings, is what we have been trying to kind of get the engine moving on. And as we push that engine of growth on the individual TD side, we are definite that over the next few quarters, the retail term deposits will also start delivering.

Amitabh Chaudhry — Managing Director and Chief Executive Officer

So Adarsh, what Ravi is trying to say in very simple words is that when we move towards constitution-based TDs, there are part of retail term deposits, which are getting reclassified as non-retail term deposits as part of that journey to do constitution-based deposits. So when you look at RTD, obviously, that number is under — kind of shows the lower growth, while an RTD shows a higher growth. So we are trying to correct it. But yes, the core growth is there. But because of this reclassification, the number is obviously muted. I hope you’ve got drift of what we’re trying to say.

Adarsh Parasrampuria — CLSA Limited — Analyst

Yes. And Amitabh, the other question — a feedback and a question which when we had this buildup in cost run rates over the last few quarters, I’m sure you would know that you got to invest and it’s a good time to invest. So what I’m trying to — what we’re trying to understand is, what’s changed in a few months or you do not have visibility of how opex will pan out? Like what’s changed in the last few months?

Amitabh Chaudhry — Managing Director and Chief Executive Officer

No, no. So I’ll tell you. When we get traction — for example, I’ll give you where we are coming from. When you start getting the traction, which we are getting, say, in our credit cards or MAB or retail asset space or when you are investing in some technology projects, which we believe again we are getting the results, you have a choice to make. One is that do we not go for that growth and kind of be in a middling range and not have those expenses in place? Or you actually go and spend that money upfront to some extent. And it reflects in long term the right kind of return on equity, the right kind of returns for you. So that’s a choice we are making. We have seen great traction in the last quarter. And we are asking ourselves, does it make sense to stick to that number or does it make sense to actually if the opportunities come before us, continue to spend and get obviously much larger, longer-term benefits. So that’s point number one. Second, if you look at our net slippages, if we spend the right kind of money on collections, we are seeing a better return in terms of what we are collecting. Expenses are coming in the expenses line, the benefit is coming in some other line, right? So we are continuing to meet our requirements for PSL and obviously, that also goes through the P&L. So there are some of these expense items where the choices between sticking to a cost to revenue line or saying that, no, we spend this, this is good for the long term and there is equity for the bank. So that’s the choice you’re making. Nothing has really changed. We are seeing better traction. The momentum is there. And we don’t want to restrain ourselves because we have talked about expense revenue number. Hopefully, we can balance it. When we have a better idea, we’ll share it with you.

Adarsh Parasrampuria — CLSA Limited — Analyst

And is there a thought that because the credit cycle is like quite benign, right? Every bank is reporting undershooting of credit cost, you some of that to like to spend and invest. Is that also a thought that’s — that’s probably a driving force to allow this fund a little bit more?

Amitabh Chaudhry — Managing Director and Chief Executive Officer

I mean, we are very clear. We have worked too hard to get to this level of our asset profile and what kind of quality of assets we have created. So reason there is guardrails, which we’ve set for ourselves, we do believe opportunities exist. Our market share in advances had gone up to 6%. We do believe and you look at the numbers, for example, in Bharat Banking. So we do not want to restrain some of our businesses by saying, because we have to meet a cost to revenue guidance, we’re not going to allow it to grow. So if opportunities are out there, which we are seeing as we speak, we will grow but within the defined risk guidelines. So I just want to be clear, this will not be at the cost of putting on riskier assets for the sake of doing it because we have to deliver a certain growth. But yes, when we do it, there are some upfront expenses which are required. You have to invest in the infrastructure and resources when you’re working with partners and upfront spend is required. And we will obviously be assessing each of these opportunities and deciding whether it makes sense to grow that much faster or at a lesser pace, which could mean that it will come in the way of our 2% cost of revenue. As and when we have a better idea, we will share it with you.

Operator

The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.

Kunal Shah — ICICI — Analyst

Yeah, hi. Yes. So the question was on the employee side. When we look at the quarter-on-quarter decline in the employee count, and we are seeing that impact even in terms of the lower employee cost. So what is actually getting into almost like 750-odd employee count being lower quarter-on-quarter?

Amitabh Chaudhry — Managing Director and Chief Executive Officer

Kunal, it just shows our ability to be able to manage costs when we want to. I think it was very important for us. We have invested in the business. It was important to ask ourselves, are the resources productive to the extent we want? Are we getting whatever we need to get out of each of those resources? As a result, as the management team, we decided that we need to tighten our screws a little bit. And in that process, and we did that, we were able to, obviously, see a reduction in staff cost, which should tell you that we’re not just throwing people at revenues, we are being very conscious of are we getting the right productivity in all of the businesses. And that’s the mantra we’ll continue to use in the year — in the current year and the years going forward. So everyone is being asked to justify when they’re spending money as to how the productivity numbers are moving, and this obviously includes both cost of people employed by the bank directly and through outsourcing. So that is being watched very, very carefully.

Kunal Shah — ICICI — Analyst

Sure. And secondly, in terms of these notes to accounts, wherein there is the loans which are transferred on the corporate side, so what is the nature of these loans? And is anything to do with the provisioning? Because last time when we look at it, standard and the non-NPA provisioning was INR13,400 crores. Now that is down to INR12,400 crores. So what is the impact of that INR1,000-odd crores, which is coming off on a quarter-on-quarter basis?

Puneet Sharma — Chief Financial Officer

So Kunal, two things. First and foremost, let’s talk about the standard asset provision. You would recollect that at the end of quarter four of last year, we had a 100% provision on security receipts. So we had a security receipt portfolio that carried a 100% provision reported on a net basis. The reduction in the standard asset provision is nothing but a markdown of that portfolio. So we’ve netted the provisions of against the investments and that has caused the reduction in both the SR figures as well as the standard asset provision number. So there is no utilization. It’s a simple markdown. So your second question in the UFR of corporate segment assets transferred, first and foremost, they are standard assets that are transferred. Second is, if your reference is to the INR5,068 crore number, it’s principally our syndication business. It’s loans that we underwrite and then syndicate by maturation that is the outflow disclosures as required by RBI. So there is an inflow number and an outflow number, both relate principally to our syndication.

Operator

Kunal, do you have any follow-up question.

Kunal Shah — ICICI — Analyst

Yes. Just one last question in terms of when we look at the net NPA and the BB & Below book, and the overall provisioning that we are carrying and the trend has also been declining. Are we very much confident in terms of how the credit cost would pan out? And would you like to give some guidance for FY ’23-’24 because it has sort of priced also over the last three quarters?

Amitabh Chaudhry — Managing Director and Chief Executive Officer

Kunal, before Puneet answers the question, let me just say that I want to emphasize the point, today, we have reached a point where we believe and we compare ourselves to some of the other players. Our asset quality is best-in-class. Our provisions are some of the highest. Our restructuring book is the lowest. And it is not driven by what we are seeing in our portfolio, it is driven by our desire to become a conservative financial institution in terms of what policies and positive positions we follow. I just want to register this point, it’s very, very important because we worked very hard to get here. Puneet, now you want to add to the numbers.

Puneet Sharma — Chief Financial Officer

Kunal, I think Amitabh has covered. The response to your question on guidance, we don’t offer guidance…

Kunal Shah — ICICI — Analyst

No, but having said that, maybe now we are well covered, so the confidence would also be higher in terms of managing it well over the next couple of years as well, looking at the last couple of quarters, trajectory.

Amitabh Chaudhry — Managing Director and Chief Executive Officer

So boss, I’ve said in the opening remarks and so as Puneet, though we remain optimistic and are confident about our future, we have said it.

Operator

The next question is from the line of Parag from White Oak Capital.Please go ahead.

Parag Jariwala — White Oak — Analyst

Yes, thank you. Just extending the cost to asset thing which you have mentioned that it is difficult to give any guidance. But I just want to know that in near term, what happens to the return ratio. So what — main thing is basically, let’s say, your cost-to-income ratio kind of remains elevated for a few more quarters or a year, will you be able to manage the overall return profile through some other line items? Or you think that in the near term, the return ratios outlook also kind of come off with respect to cost of income ratio staying elevated?

Puneet Sharma — Chief Financial Officer

Thanks for the question. I think, one, we stay committed to the aspirational ROE of 18%, which we set out. We stay committed to the fact that we have visibility of 16%, 16.5% ROE. And despite our comments on cost, we believe both of our earlier comments stand steady over our plan period. Therefore, there is no revision to the ROE numbers that we are endeavoring for.

Parag Jariwala — White Oak — Analyst

Okay. Not even the tenure in which you want to attend that?

Puneet Sharma — Chief Financial Officer

Like we previously said that we do our planning over a 3-year period, the aspirational ROE of 18% is over a 3-year plan, so ’23 to ’25. Visibility of 16.5% exist as on today for the planned period. Therefore, with that comment, we are not revising the tenure of our aspiration or our visibility despite continuing to invest in the business.

Operator

The next question is from the line of Jai Mundhra from B&K Securities.Please go ahead.

Jai Mundhra — Batlivala and Karani — Analyst

Yeah, hi, thanks for the opportunity. Sir. I have three questions. One is on your Airtel co-branded credit card tie up. So clearly, this is one of its own kind. It will do — it does have a large captive customer base. If you can share the economics and what kind of milestones are you looking here for Axis Bank perspective?

Amitabh Chaudhry — Managing Director and Chief Executive Officer

See clearly, we started the journey with the largest — the Sanjeev Moghe takes care of cards business. So we started this journey with the Flipkart partnership, which we started from July of ’19. Since then, we’ve struck a large partnership with Google as well. And Airtel was a large opportunity, which we cracked. This is around mid of last year. Since then, we were able to launch this card in the period of six to seven months. It’s a very large franchise. Obviously, all of us are very, very well aware of Airtel. We believe with the capabilities we’ve developed on risk, on technology and experience for the customers, we have the ability to forge a winning partnership with Airtel. It has just started. It’s been less than 60 days. Actually, we launched it somewhere around 1st — I think, around 10th of March or so. So it’s been only as we talk for the results first 20 days of March. We see a healthy traction, and we will continue to see gains as we go along. You want me to elaborate something more, I’m happy to do it?

Operator

Jai, do you have any follow-up questions?

Jai Mundhra — Batlivala and Karani — Analyst

Yes. Yes. So I do have. So okay, sir. So if you can highlight within that period, probably this product will become breakeven? Or is it any — how does it serve the entire ecosystem approach kind of a thing, if you have an answer for that as of now? And as the Flipkart has already sort of got into the breakeven June? Or how quickly can it get there?

Amitvikram Talgeri — Chief Risk Officer

See, we don’t discuss product level financials any which way on this call. I think what we should know is Flipkart has touched two million cards. Right now, it’s part of our declaration in this quarter, and we launched it in July of ’19. Obviously, this period was also in the midst of COVID wave 1, COVID wave 2, etc. Those issues, if we don’t anticipate, we anticipate Airtel to be at the same trajectory or faster than what you’ve seen on Flipkart. That’s as much as we can put out right now.

Jai Mundhra — Batlivala and Karani — Analyst

Sure. And second question, sir, if you can highlight the gross slippages and you have given — of course, given the net slippages, but if you can give the gross slippages on corporate, retail and SME, that would be very useful.

Puneet Sharma — Chief Financial Officer

If you look at it, our retail versus wholesale gross slippages would be 63% retail, 37% wholesale, which is wholesale plus CBG put together. I would again like to point out the fact that against the INR3,981 crore gross slippage number, we have recoveries and upgrades of INR3,763 crores. We have recoveries from written-off pool of INR719 crores. Consequently, net for the quarter, we are negative INR512 crores. If I ignore the recoveries from the written-off pool for the quarter, we have a net slippage of an absolute value of INR218 crores. I think it’s important to put the gross and the net in the same context. Additionally, 54% of the gross slippage is attributable to linked accounts that was standard when classified as slippage plus other standard accounts that slipped and recovered in the same quarter. So that is the context that we would request you to read the INR3,981 crores.

Jai Mundhra — Batlivala and Karani — Analyst

Sure. And the last question is, sir, you have identified a few focus segments, which includes SBB and rural. And of course, we are seeing very strong growth there. If you can talk about this in slightly more detail that, A, is this sort of a low base and hence, such a high growth? B, Would this — I mean rural, is this — what all products would it include? And SBB, I think, is a normal business banking? Or is there anything more in these two products?

Sumit Bali — Group Executive, Head of Retail Lending

This is Sumit here. So SBB for us is small business banking. It’s typically comprising 80% of secured business, which is less than INR one crore ticket size. Average ticket size of about INR65 lakh, and that’s secured and it also comprises of the balance, 20% is the unsecured business installment loan. Both are strong business segment for us, and we would like to grow them. The numbers speak for themselves, and we continue to invest in these to have good growth ahead. And these are flows business. So you can imagine it creates a very strong value proposition at the entire banking level.

Munish Sharda — Group Executive and Head of Bharat Banking

This is Munish Sharda. Rural is a part of a Bharat Banking initiative where we are trying to drive higher business growth in the rural and semi-urban markets in the country. The initiative covers all the products of the bank serving the segment of customers and the geographical segments in this market. So all the rural-lending products like farm finance, farm equipment finance, gold loan, micro finance products, etc, all the retail assets and liabilities in our rural and semi-urban markets are part of this initiative. We believe that driving this deeper into this market will help us achieve a higher growth ambition, higher NIM ambition, help us get more accretive PSL business and also drive more liability growth in these markets.

Operator

The next question is from the line of Nilanjan from Nomura. Please go ahead.

Nilanjan Karfa — Nomura — Analyst

I hope I’m audible. So quickly on that recovery on written-off assets, where is it coming from? Any color?

Puneet Sharma — Chief Financial Officer

Nilanjan, if I get your question right, you wanted to know where is the recoveries from the written-off pool coming from?

Nilanjan Karfa — Nomura — Analyst

Yes, it’s a really large item. So any specific situation that we had because of which this recovery came through? Any sector?

Puneet Sharma — Chief Financial Officer

So Nilanjan, I think the way we would expected to think about if this is close to 65% of the recoveries from written-off accounts have come in from the retail segment and the balance is coming from the corporate. Broadly, it would be a couple of large accounts on corporates that have ended up being recovered. And in retail, it’s broad-based recovery from the written-off pool.

Nilanjan Karfa — Nomura — Analyst

Right. The reason for asking this question, Puneet, is I mean if you — you have been articulating that we will not restructure more, and we will basically take a hard path of reclassifying assets and building accounts as NPLs. So the question is assuming this is the path we have taken, do you see more and more upgrades. At some point, the proof in the pooling, what you have been saying, has to materialize. So is there a steady run rate on these numbers that we might expect going forward?

Puneet Sharma — Chief Financial Officer

So Nilanjan, thanks for the question. I think the way you can look at it is in quarter 3, our recovery from written-off accounts was INR800-odd crores, we’ve done a similar number in the current quarter. So to our commentary that we’ve let accounts slip and then provided for them, but continued our endeavors to recover from the customers is demonstrated across multiple quarters of higher recovery amounts. We do think that that’s something that we will continue to pursue on a go-forward basis too. The outcomes we will get reported at every quarter end.

Nilanjan Karfa — Nomura — Analyst

Right. And accounting-wise, this is under other income, right, not in the provision line?

Puneet Sharma — Chief Financial Officer

Under the new RBI circular, it sits under the provision line.

Nilanjan Karfa — Nomura — Analyst

This is under provision, okay. And there’s one thing I kind of wanted to highlight. I mean, the guidance that you are putting out on ROE, I mean don’t mind me saying this, but it’s looking like a little one year roll forward every time. And I think we have sort of been maintaining about 16%, 16.5% is what is visible and rest will come at certain conditions being met. Will we ever — forget about 18%, but even getting to 17%, is there a hope that we will get there?

Puneet Sharma — Chief Financial Officer

So Nilanjan, I think the way you need to look at it is what I called out for FY ’22 full year performance. I have said that we are at 13%, which is 12.91% full year FY ’22. We were at 9% last year. So there is a 536 basis points improvement in ROE year-on-year, which in some sense should clearly substantiate to you that the journey is clearly underway. That’s one. Second is in the course of our call today, we specifically called out the fact that the consolidated bank ROE Q4 annualized is 16.67%, which again demonstrates the fact that when we said we had visibility of 16.5%, there is demonstration of that visibility, fully taking into account that Q4 is sequentially a strong quarter, but it should give you comfort that when we say visibility exists, we meant visibility existed. To your last point that we have extended the guidance of 18% ROE by one year on a roll-forward basis. Our GPS strategy is a 3-year strategy. We have consistently maintained from March ’21 that we will get to the 18% ROE over our plan period, which was FY ’25. We stay true to that, and that is the aspirational number that we will work towards. So I think that’s the four parts to your — answer to your question, but I’m happy to take a follow-on, if I haven’t been able to address your questions.

Nilanjan Karfa — Nomura — Analyst

No, I’ll take the follow-on off-line. But a final question, it does look like the overall system is a little bit sluggish irrespective of intuition-driven capital requirements, etc. As a management or driving business, which side of the balance sheet is getting more difficult as we said at this point in time? Is it the asset side or the funding side — or the granular funding side?

Amitabh Chaudhry — Managing Director and Chief Executive Officer

Well, from our perspective, as we stand today, nothing looks sluggish. But yes, as you very rightly pointed out, things are getting tough because of the war and the second and the third order impact of that. The driving force for us to get the numbers right, finally, we would be happy with the deposit growth. So we need to get that right. Once we get that right, we believe our engine can follow up with a certain amount of asset growth relatively easily. I mean I’m not saying it is easy, relatively easy. So deposit growth is the key number for us. And obviously, we need to drive it. We don’t want to drive deposit growth just for the sake of it. We are very clear that we need to drive granular deposit growth, and that’s what we’re working hard towards. Do we see something today, which is really bothering us? Not as of now, but obviously, we have been very, very watchful. Everyone is bringing the economic growth forecast down for India. Inflation is rising. Interest rates are — as predicted by a lot of people are expected to rise. And the consumer inflation will hit people. It could reduce or lower expenditure and so on and so forth. So yes, we are watching that space quite closely. Let’s see how that pans out.

Operator

The next question is from the line of Krishnan from HDFC Securities.Please go ahead.

Krishnan — ASV — Analyst

Yes. Are you able to hear me?

Operator

Yes, sir, we can.

Amitabh Chaudhry — Managing Director and Chief Executive Officer

Yes, we can hear you.

Krishnan — ASV — Analyst

Yes. Sure. So just one particular point which has been structurally visible with Axis, I just wanted your views on that, was more around the fact that you have worked very hard to get to the asset profile and the asset mix and the shape of the asset quality that you have gotten over the last four years. And because of that risk of approach is pricing power on the asset side something that you’re finding difficult to probably [invite]. And hence, are you having to work too hard on the cost side? That’s what I’m trying to get at.

Puneet Sharma — Chief Financial Officer

See, I think if you look at what I had said, the focus is really on increasing NIMs and focus on delivering 18% ROE. And so therefore, in an environment where pricing is extremely competitive, particularly at the short and for the larger corporates. Our strategy of building out a granular book through our SME, i.e. CBG and mid-corporate is working well. And so therefore, it’s not a question of risk aversion. I think the point that the previous speakers spoke about is that, in general, the credit risk environment is benign and is expected to be benign into the foreseeable future. The issue in the large corporate space is really about pricing. And I think pricing, we do believe will begin to improve when credit growth, particularly in the large corporate side, begins to increase, A. And B is when repo rate, etc, begin the first time — a first action by RBI will start to, to my mind, begin to improve pricing on the large corporate side. Having said that, we continue to deepen our relationships with the large corporates. It’s not as if we are not doing business with them on other fronts. Amitabh mentioned the fact that our One Axis strategy is working well with the large corporates, and we are now the IFR Asian Banker of the Year. We continue to do — we continue to serve our customers across the capital structure, whether it is domestic equity, global bonds, local bonds, loans, etc. So some of these fees are sitting in our own fee line and some of it is sitting in, for example, in Axis Capital’s fee incomes. And therefore, as long as we’re able to deliver sustainable RAROC with these relationships, we are quite satisfied.

Krishnan — ASV — Analyst

Okay. The other query I had was around the cards business. I know there was a little bit of discussion around this. But just the acquisition of the Citi, I mean, portfolio, right? It’s a great asset to have at probably a good price as well. But generally, your approach towards running the cards business has again been a little risk-averse. You have stuck to, I mean, existing bank customers. How are you sensing your own maturity in that business in terms of being able to re-risk the portfolio?

Amitvikram Talgeri — Chief Risk Officer

Okay. I’ll not touch anything on Citi because that deal will take some time to actually fructify. I’ll just talk about our strategy. We went cautious on risk in FY ’21, as we saw the risk profile change. With COVID first the fact that wave came in, it impacted the economic cycle in the country. We went cautious at that point of time. As you’ve seen that change in FY ’22, we have taken step side. You can look at our acquisition momentum for last quarter 3, we did 7.5 lakh plus cards, highest ever for us. This quarter, we’ve done 1.1 million plus. We are confident the number of cards we put out in March is the highest in the industry ever. So these numbers are strong. What we have now with our portfolio, with our partnerships is a very solid momentum, which we expect to continue. Second, we used to be an ETB dominant [Indecipherable] strategy, [Indecipherable] channel focus. Today, 30 percentage plus of what we do is not existing bank customers. They are what we call some part NTB, which is new to bank acquired from the market but through a very different channel, it’s called DSC sourcing, etc. Second part, what we call known to bank, which is people known to partners of us. They could be customers of Flipkart. They could be customers of Google. They could now be customers of Airtel as well. Between these, we believe the risk profile is much better than what we see in NTB. However, the spend and usage patterns are very, very healthy. We believe this strategy is going to work. Risk profile is good, spend pattern is pretty good. And the momentum we have seen right now in quarter three and quarter four will continue. We have not been risk averse. I don’t know where that’s coming from.

Krishnan — ASV — Analyst

Okay. No, I mean I just meant the number one on the ETB, NTB and also the fact that leverage — consumer leverage on our portfolio is generally a little lower. But anyways, I mean I think you have answered both of these.

Operator

I now hand the conference over to Mr. Puneet Sharma for closing comments.

Puneet Sharma — Chief Financial Officer

Thank you, Nirav. Thank you, ladies and gentlemen, for taking the time to speak with us this evening. Please do reach out to us if there are any questions that remain unanswered, we’d be happy to take them on and assess them at a future date. Thank you. Have a good evening.

Operator

[Operator Closing Remarks]