Axis Bank Ltd Q1 FY23 Earnings Conference Call Insights

Key highlights from Axis Bank Ltd (AXISBANK) Q1 FY23 Earnings Concall

Q&A Highlights:

• Mahrukh Adajania from Edelweiss asked about loan growth outlook. Amitabh Chaudhry MD replied that the bank delivered double digit growth and will continue to grow faster than the market. AXISBANK said it is not worried about getting the loan growth back but waiting for the right pricing to resume.

• Mahrukh Adajania of Edelweiss enquired about reclassification of some deposit from retail to wholesale if that’s all done. Amitabh Chaudhry MD clarified that a small amount is still pending but most of that work is almost done.

• Mahrukh Adajania of Edelweiss asked about near term target for opex. Puneet Sharma CFO said the expenses would go up. The bank’s cost to expenses was 2.17 in 4Q22, which went up to 2.24 led by the investments in growth business.

• Mahrukh Adajania of Edelweiss also asked about reason for employee expenses rising sharply QoQ. Puneet Sharma CFO said that on a YonY basis, the bank added 6,150 people to its growth businesses and tech and digital teams. Second impact is the RBI instruction on accounting for ESOPs that didn’t happen in 1Q22 which is reflected currently.

• Abhishek Murarka with HSBC asked about the outlook for NIM. Puneet Sharma CFO answered that the bank remains committed to getting to the 3.7%, 3.8% improvement over the next 8-10 quarters.

• Kunal Shah from ICICI Securities asked about growth in terms of retail TD on a like for like basis. Ravi Narayanan GE said the whole focus is on getting the LCR accretive business moving. On the like for like basis, the TD figures will be around the 13% growth YoY.

• Rahul Jain of Goldman Sachs enquired about credit card momentum being strong and what would be the revolver rate and EMI portion out of the spend. Sanjeev Moghe EVP answered that revolver rates have reduced for ASIXBANK and for the entire industry. This means a lot of revolvers went out with the credit cycle seen couple of years back.

• Mahesh M.B. from Kotak Securities enquired that with respect to the spread improvement reported in 1Q23, how much is attributed to the loan mix. Puneet Sharma CFO replied that the company has not split the 13 bp, but it will be a mix of repricing effect on the floating rate book plus the mix effect.

• Mahesh M.B. from Kotak Securities also asked how does the bank see the pricing of the loan book changing over the next couple of quarters given the yield movement. Puneet Sharma CFO answered that about 69% of the entire loan book is floating rate, of which roughly about 30% is repo. The MCLR reprice is going to be more out in time; the repo re-prices will be faster.