RESULTS REVIEW 2QFY16

28 OCT 2015

Axis Bank
BUY
INDUSTRY
CMP (as on 27 Oct 2015)
Target Price

BANKS
Rs 522
Rs 618

Nifty

8,233

Sensex

27,253

KEY STOCK DATA

Bloomberg

AXSB IN

No. of Shares (mn)

2,378

MCap (Rs bn) / ($ mn)

1,241/19,094

6m avg traded value (Rs mn)

4,219

STOCK PERFORMANCE (%)

52 Week high / low

Rs 655/420

3M

6M

12M

Absolute (%)

(6.1)

(0.5)

22.3

Relative (%)

(5.0)

(0.7)

20.4

SHAREHOLDING PATTERN (%)

Promoters

29.54

FIs & Local MFs

14.53

FIIs

42.13

Public & Others

13.80

Source : BSE

Darpin Shah
darpin.shah@hdfcsec.com
+91-22-6171-7328
Siji Philip
siji.philip@hdfcsec.com
+91-22-6171-7324

Taking it on the chest

Axis Banks (AXSB) reported in line earnings and
asset quality. Asset quality was optically stable
following the sale to ARC (Rs 18.2bn). The sale was at
~65% haircut, with a Rs 3.4bn hit on P&L and Rs
8.5bn from contingent provisions. Including this
cleanup, slippages stood at Rs 24bn (3.3% ann.) vs.
the reported 0.8% ann.
AXSBs conservative approach of building up
contingent provisions through wind fall gains has
provided a handy cushion this quarter. While the B/S
continues towards increasing granularity and
diversification, the corporate book's baggage is
hitting asset quality. Still, AXSB remains ahead of
comparable peers on coverage ratio.
AXSB continues to remain our preferred bet given its
strong liability franchise, improving granularity,
healthy B/S and superior return ratios. Maintain BUY
with a revised TP of Rs 618 (2.5x FY17E ABV).

Highlights of the quarter

AXSB classified two power sector exposures (Rs

18.2bn) as NPAs and sold them to ARC for a

haircut of ~65%. The bank provided Rs 3.4bn
(through P&L) for the impairment and utilised
Rs 8.5bn (from its contingent provisions vs.
amortising losses over eight quarters).

With the sale to ARC, AXBSs asset quality was

stable with G/NNPA increasing by a mere 5/6%

QoQ. Gross stressed additions for 1H (including
assets sold to ARC) stood at Rs 48bn (3.3% ann.),
which were higher than expectation, given the
management's guidance of gross stressed
additions of <Rs 57bn in FY16.

AXSB restructured assets worth Rs 4.6bn and

moved a couple of ACs (worth Rs 15bn) to the the

5:25 scheme (vs. one AC of Rs 5bn in 1QFY16).

Financial Summary
(Rs mn)
Net Interest Income
PPOP
PAT
EPS (Rs)
ROAE (%) (ex revaluations)
ROAA (%)
Adj. BVPS (Rs)
P/ABV (x)
P/E (x)

2QFY16
40,621
36,280
19,156
8.1

2QFY15
35,249
31,623
16,107
6.8

YoY (%)
15.2%
14.7%
18.9%
18.0%

1QFY16 QoQ (%)

FY14
FY15
FY16E
FY17E
40,562
0.1% 119,516 142,241 171,068 199,086
40,921 -11.3% 114,561 133,854 162,287 188,671
19,784
-3.2% 62,177 73,578 86,846 102,367
8.3
-3.3%
26.5
31.0
36.6
43.2
17.4
17.8
18.0
18.2
1.72
1.74
1.75
1.74
158.3
182.9
212.0
247.3
3.30
2.85
2.46
2.11
19.7
16.8
14.2
12.1

Source: Bank, HDFC sec Inst Research

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO> & Thomson Reuters

AXIS BANK : RESULTS REVIEW 2QFY16

Five Quarter At A Glance

(Rs mn)
Net Interest Income
Non-interest Income
Operating Income
Operating Expenses
Pre provision Profits
Provisions and Contingencies
NPA Provisions
PBT
Provision for Tax
PAT
OTHER DETAILS
Balance Sheet items/ratios
Deposits (Rs bn)
CASA Deposits (Rs bn)
Advances (Rs bn)
CD Ratio (%)
CAR (%)
Tier I (%)
Profitability
Yield on Advances (%)
Cost of Deposits (%)
NIM (%)
Cost-Income Ratio (%)
Tax Rate (%)
Asset quality
Gross NPA (Rs bn)
Net NPA (Rs bn)
Gross NPAs (%)
Net NPAs (%)
Delinquency Ratio (ann, %)
O/s restructured book (%)
Coverage Ratio (%)

2QFY15
35,249
19,476
2,708
23,102
31,623
7,250
6,400
24,373
8,266
16,107

3QFY15
35,896
20,391
3,290
23,140
33,146
5,072
3,630
28,075
9,077
18,998

4QFY15
37,992
26,873
2,749
24,737
40,128
7,098
3,710
33,030
11,225
21,805

1QFY16
40,562
22,983
6,460
22,624
40,921
11,218
7,960
29,703
9,919
19,784

2QFY16
40,621
20,414
1,675
24,755
36,280
7,072
6,190
29,208
10,051
19,156

YoY Growth
15.2%
4.8%
-38.1%
7.2%
14.7%
-2.5%
-3.3%
19.8%
21.6%
18.9%

QoQ Growth
0.1%
-11.2%
-74.1%
9.4%
-11.3%
-37.0%
-22.2%
-1.7%
1.3%
-3.2%

2,837
1,264
2,422
85.4
15.9
12.5

2,912
1,256
2,606
89.5
15.6
12.4

3,224
1,444
2,811
87.2
15.1
12.1

3,078
1,316
2,846
92.5
15.1
12.2

3,241
1,434
2,981
92.0
15.4
12.2

14.2%
13.5%
23.1%
660 bps
-48 bps
-33 bps

5.3%
9.0%
4.7%
-52 bps
37 bps
6 bps

10.6
6.2
4.0
42.2
33.9

10.3
6.2
3.9
41.1
32.3

10.4
6.3
3.8
38.1
34.0

10.0
6.1
3.8
35.6
33.4

10.1
6.0
3.9
40.6
34.4

-50 bps
-20 bps
-12 bps
-165 bps
50 bps

8 bps
-13 bps
4 bps
496 bps
102 bps

36.1
11.8
1.3
0.4
1.5
2.8
78.0

39.0
12.5
1.3
0.4
1.1
2.6
78.0

41.1
13.2
1.3
0.4
0.9
2.9
78.0

42.5
14.6
1.4
0.5
1.7
3.0
78.0

44.5
15.4
1.4
0.5
0.8
2.8
78.0

23.2%
30.8%
4 bps
4 bps
-74 bps
6 bps
0 bps

4.7%
5.6%
0 bps
0 bps
-88 bps
-16 bps
0 bps

Change In Estimates
(Rs mn)
NII
PPOP
PAT
Adj. BVPS (Rs)
Source: HDFC sec Inst Research

FY16E
Old
172,672
161,843
88,497
214

New
171,068
162,287
86,846
212

FY17E
Change
-0.9%
0.3%
-1.9%
-0.8%

Old
202,279
189,849
106,565
252

New
199,086
188,671
102,367
247

Change
-1.6%
-0.6%
-3.9%
-1.8%

In line with estimates with

marginally better NIM
PPOP miss of 5% was led by
higher-than-estimated other
opex and lower treasury gains
Includes provisions of Rs 3.36bn
for the impairment of two ACs
sold to ARC
Contingent provisions of Rs
8.5bn utilised , thus not having
an impact on PAT
Driven by retail (+27%), fourth
consecutive quarter of strong
YoY growth in corporate (+26%)
Domestic NIM at 4.11% and
foreign at 1.6%
Sale to ARC (Rs 18.2bn) cushioned
headline GNPAs
Slippages were higher than
expected at Rs 24bn (3.3% ann.)
including the sale to ARC; fresh
restructuring was lower at
Rs 4.6bn vs. Rs 7.4bn QoQ

Page | 2

AXIS BANK : RESULTS REVIEW 2QFY16

Business momentum continues

improvement with 61% book in A to AAA

category vs. 60% QoQ. A break-up of funded
exposure shows QoQ rise in infra (37bps, 7.2%
share) and metals (+30bps, 6.2% share).
However, a QoQ decline was seen in power
(-76bps, 5.9% share) and real estate (13bps,
3.1%).

The retail segment's share is steady at 40.1%.

Within the segment, mortgage loan share was

Source: Company, HDFC sec Inst Research

borrowings (+51% YoY) over deposits (+14%

YoY). Thus, C-D ratio is elevated at ~92%
(domestic at 78%), +660bps YoY. The low-cost
deposits (44.2% share; +~150ps) grew 9% QoQ
(13.5% YoY), driven by CA growth of ~15% YoY (&
QoQ as well) and saving deposits growth of
~13/6% YoY/QoQ. Average CASA ratio, too, was
stable at ~40%. This, coupled with retail TD
(+18% YoY), resulted in the highest retail
deposit share at ~80%.

Retail

SME

Corporate

24 26 27 27 34
35 38 38 40 39 38 40 40 40
13

14

14

15

15

16

16

17

15

16

15

15

13

13

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

3QFY13

54 53 53 50
50 48 46 44 44 45 47 45 46 46

2QFY13

32.5
30.5
28.5
26.5
24.5
22.5
20.5
18.5
16.5
14.5
12.5

1QFY13

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

4QFY14

3QFY14

2QFY14

1QFY15

Growth (YoY, %)
%

Rs bn

1QFY14

On the funding front, the bank opted for

Retail Segment Remains Growth Driver

Advances (Rs bn)

3,250
3,050
2,850
2,650
2,450
2,250
2,050
1,850
1,650
1,450
1,250

flat QoQ at 48% (+500bps YoY). The banks

unsecured retail portfolio stood at 14%, which
the bank intends to increase over the next few
quarters. With pickup in the corporate book,
continued momentum in retail portfolio,
coupled with a well-capitalised B/S, we have
factored loan growth of 20% over FY15-17E.

4QFY13

Advances Grew 23% YoY

4QFY13

We have factored loan

growth of 20% over FY15-17E

In the corporate segment, we saw a marginal

3QFY13

Sequentially, funded
exposures increased in sectors
like infra and metals, while
that for power and real estate
declined

of 9-10% driven by corporate (+26% YoY, ~46.5%

share) and retail (+27%, 40% share). However,
the SME segment (+5%, 13% of loans) grew at a
moderate rate. The corporate segment's share
improved with 2QFY16 being the fourth
consecutive quarter of 26+% growth vs. the
earlier trend of high single-digit growth.

2QFY13

Retail book, too, grew ~27%

YoY to form ~40.1% of total
loans

Loans grew ~23% YoY, ahead of industry average

1QFY13

For the fourth consecutive

quarter, corporate growth
was healthy (+26%)

Source: Company, HDFC sec Inst Research

Page | 3

AXIS BANK : RESULTS REVIEW 2QFY16

Within the retail segment,

unsecured loans form ~14% of
the total retail loans

CA grew 15% YoY and QoQ,

while the SA deposits grew
~6% QoQ to form 44% of the
total deposits
On an average, daily balance
CASA ratio was steady at 40%
Sharp drop in cost of deposits
and stable yields led to 4bps
rise in NIM vs. our estimate
decline
We have factored NIM of
average 3.6% over FY16-17E
82% of the domestic book
linked to base rate

Retail Loan Mix: Secured Book At 86%

(%)
Housing
Personal & CC
Auto
Non -Schematic
Retail Agri
LAP

1QFY14
65
10
12
5
8

2QFY14
64
10
11
7
8

3QFY14
64
10
11
6
9

4QFY14
63
10
12
6
9

1QFY15
53
9
10
5
15
8

2QFY15
53
9
9
6
15
8

3QFY15
50
9
9
10
15
7

4QFY15
48
9
8
12
16
7

1QFY16 2QFY16
48
48
10
10
8
8
11
11
15
15
8
8

Source : Bank HDFC sec Inst Research

Deposit Mix : Avg CASA Balance At ~40%

(%)
CA
SA
Retail TD
Others

1QFY14
16
27
27
30

2QFY14
17
26
27
31

3QFY14
16
27
31
26

4QFY14
17
28
30
25

1QFY15
15
27
34
23

2QFY15
16
28
34
21

3QFY15
16
27
35
22

4QFY15
17
27
33
22

1QFY16
15
28
36
21

2QFY16
17
28
36
20

Source : Bank HDFC sec Inst Research

Superior NIM and fee performance

AXSB again surprised with a superior NIM

performance (3.85%, +4bps QoQ) with domestic

NIM at 4.1%. This was largely because of (1)
Steady yields, (2) Sharp decline in the cost of
deposits, and (3) Elevated CD ratio. We have
lowered our NIM assumption to factor in the
recent sharp reduction in base rate and the
move towards the new RBI regulations
(marginal cost of funds). We factor NIM of 3.6%
over FY15-17E.
Led by strong growth in retail fees (Rs 7.2bn,
+19/18% YoY/QoQ) and corporate fees (+27/2%

QoQ/YoY), fee income grew 17/15% YoY/QoQ.

However, lower treasury gains (Rs 1.7bn,
-74/38% QoQ/YoY) and lower forex income
(Rs 612mn, -40/-30% YoY/QoQ) led to muted
below estimates non-interest income (Rs 20.4bn,
-11% QoQ).

With pickup in corporate loans and steady retail

loans, we expect fee income traction to

continue. We have factored non-interest
income growth of 16% CAGR with fee growth of
~17% CAGR

Cost And Yield Movement

%
NIM
Cost of fund
Yield on fund (calc.)
CD Ratio (RHS)

1QFY14
3.86
6.26
8.91
83.1

2QFY14
3.79
6.25
9.18
78.8

3QFY14
3.71
6.29
9.06
80.6

4QFY14
3.89
6.20
8.86
81.9

1QFY15
3.88
6.21
8.97
84.8

2QFY15
3.97
6.19
9.19
85.4

3QFY15
3.93
6.17
8.99
89.5

4QFY15
3.81
6.26
9.04
87.2

1QFY16
3.85
5.99
9.20
92.0

Source : Bank

Page | 4

AXIS BANK : RESULTS REVIEW 2QFY16

2QFY15
15.9
2.69
2.7
0.9
19.5
10.3

3QFY15
16.9
2.68
3.3
0.2
20.4
24.0

4QFY15 1QFY16 2QFY16

21.2
15.5
18.1
3.14
2.19
2.49
2.7
6.5
1.7
2.9
1.0
0.6
26.9
23.0
20.4
21.4
35.9
4.8

25

29

25

28

19 19

3.0
2.0
1.0

Source : Bank

Source : Bank

C-I Ratio Jumped QoQ

Other Provisions Declined 37% QoQ

C-I ratio (%, RHS)

47.0

25.0

10.0

Source : Bank

8.0

20.0

6.0
15.0

4.0

10.0

2.0

2QFY16

1QFY16

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

5.0

1QFY14

2QFY16

1QFY16

4QFY15

35.0

3QFY15

0.90

2QFY15

37.0

1QFY15

0.95

4QFY14

39.0

3QFY14

1.00

2QFY14

41.0

1QFY14

1.05

4QFY13

1.10

43.0

4QFY13

45.0

1.15

2QFY16

49.0

% Operating Profit
12.0

3QFY13

1.20

Other provision (Rs bn, RHS)

2QFY13

1.25

30.0

1QFY13

Opex/Other income (x)

1.30

1QFY16

4QFY15

26

3QFY15

24

2QFY15

4QFY14

30

4QFY15

31

3QFY14

30

29

2QFY14

29

1QFY14

33

4QFY13

32

10

1QFY15

4QFY14

40

3QFY14

39

2QFY14

10

39

1QFY14

39

4QFY13

38

3QFY13

4.0
37

2QFY13

10

Retail fee % Retail loan (ann., %)

Corp. fee % Corp. loan (ann., %)

1QFY13

34

2QFY16

33

Sharp Improvement in Fee Income Contribution

5.0

1QFY16

32

4QFY15

30

3QFY15

32

2QFY15

32

1QFY15

31

1QFY13

Other provisions were 26%

below estimates at Rs 7.1bn
(-37% QoQ), with a decline in
LLP (-22% QoQ)

4QFY14 1QFY15
17.8
13.8
3.23
2.39
2.2
2.6
2.2
0.5
22.1
16.9
10.3
(5.1)

Business banking
Treasury

28

1QFY13

However, the core C-I ratio

jumped 210bps QoQ to 41.7%

Retail Banking
Agri and SME banking
Large and Mid Corp

35

Addition of 154 branches,

coupled with lower other
income, pushed up C-I ratio by
~500bps QoQ to 40.6%

3QFY14
14.6
2.82
0.3
1.5
16.4
1.8

Fee Income Break-up: Retail Segment Dominates

3QFY13

Aggregate fees % of loans

jumped to 2.5% ann. vs. 2.2%
in 1Q

1QFY14 2QFY14
13.2
14.3
2.67
2.87
4.4
0.0
0.2
3.3
17.8
17.7
33.4
10.9

Source : Bank

3QFY13

Corporate fees saw a

sequential jump of 27%

Rs bn
Fee
% Loan book (ann.)
Trading
Others
Total
Growth (YoY, %)

2QFY13

Retail fees grew ~19% to

Rs 7.2bn and third-party fees
grew ~6% to Rs 2bn

Non-Interest Income: Retail Fees Remain Healthy

2QFY13

Lower treasury gains

(Rs ~1.7bn) and forex income
led to lower-than-estimated
non-interest income

Source : Bank

Page | 5

AXIS BANK : RESULTS REVIEW 2QFY16

AXSB classified two power

sector exposures (Rs 18.2bn)
as NPA and sold to ARC
The bank took haircut of
~65% on these assets
Consideration received Rs
6.5bn (including Rs 1bn in
cash)
AXSB provided Rs3.4bn
(through P&L) for the
impairment of these assets
and utilised Rs 8.5bn from the
contingent provisions vs.
amortising the loss over the
next eight quarters

Slippages incl. the sale to ARC

stood at Rs 24bn (3.3%)
Slippages include Rs 900mn
from restructured pool
G/NNPA increased 5/6% QoQ
to form 1.4/0.5% of loans

Asset sale cushions headline asset quality

AXSB sold two power sector exposures

(belonging to the single corp) worth Rs 18.2bn

for a haircut of ~65%. The bank provided
Rs 3.4bn (through P&L) for the impairment and
utilised Rs 8.5bn from its contingent provisions.
O/S contingent provisions stood at Rs 4.5bn.

management's guidance of
additions of <Rs 57bn in FY16.

stressed

While AXSB has been able to manage the risk in a

challenging macro environment by building

granularity, the corporate book's historical
baggage continues to result in higher gross
stressed additions. With slower-than-expected
recovery, we have revised upwards our average
slippages assumption to 1.22% from 1% earlier
over FY16-17E

With these sales, AXBSs asset quality was stable

with GNPA at Rs 44.5bn (+23/5% YoY/QoQ) and

NNPA increase of ~6% QoQ to Rs 15.4 (0.5%).
Further, PCR was maintained at ~78%. While the
reported slippages were a mere Rs 5.8bn (0.8%
ann.), slippages including sale to ARC stood at Rs
24bn (3.3% ann.).

gross

Loan loss provisions stood at Rs 6.2bn (85bps

ann.), including Rs 3.36bn towards these

impaired assets. The strategy to create a
contingent buffer has cushioned the P&L impact
for AXSB. The bank utilised Rs 8.5bn of
contingent liability towards the losses on sale of
these assets vs. amortisation over the next eight
quarters. We factor non-tax provisions of
110bps over FY15-17E vs. 90bps in FY15.

AXSB restructured assets worth Rs 4.6bn and

sanctioned a couple of ACs worth Rs 15bn under

the 5:25 scheme (vs. one AC of Rs 5bn in 1Q).

Gross stressed additions for 1H (including assets

sold to ARC) stood at Rs 48bn (3.3% ann.), which
were higher than expectation, given the
Provision Break-Up: LLP AT 0.85% ann.
Rs bn
NPA
% loan (ann)
MTM Loss
Others
Total
YoY %

1QFY14
5.7
1.16
1.2
0.2
7.1
175%

2QFY14
2.9
0.57
0.4
3.6
6.9
35%

3QFY14
2.9
0.57
(1.7)
0.8
2.0
-48%

4QFY14
1.4
0.26
(0.9)
4.5
5.1
-15%

1QFY15
3.4
0.58
(0.2)
0.7
3.9
-46%

2QFY15
6.4
1.08
0.9
7.3
5%

3QFY15
3.6
0.58
(0.2)
1.6
5.1
150%

4QFY15
3.7
0.55
(0.1)
3.5
7.1
40%

1QFY16 2QFY16
8.0
6.2
1.13
0.85
0.3
0.7
3.0
0.2
11.2
7.1
190%
-2%

Source : Bank, HDFC sec Inst Research

Fresh restructuring was

Rs4.6bn vs. Rs 7.4bn QoQ
O/s std. restructured pool
now stands at Rs 84.6bn,
Page | 6

AXIS BANK : RESULTS REVIEW 2QFY16

Slippages

3.2
2.7
1.4

1.3

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

3QFY13

0.0

1QFY13

Source : Bank

2.0
1.0

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

2QFY13

1QFY13

2.5
1.9

5.0

0.6

10.0

3.0

0.5

10.0

0.5

2QFY13

20.0

15.0

0.6

30.0

2.5

20.0
1.0

2.6

40.0

%
4.0

Rs bn

3.3

25.0

Gross stress addition % loan book (RHS)

2.4

1.5

Restructuring

1QFY14

50.0

Impaired asset formation elevated

NNPA (Rs bn)

NNPA (%, RHS)

4QFY13

GNPA (Rs bn)

GNPA (%, RHS)

2.8

Headline asset quality continue to be stable

Source : Bank

Higher Provision Hit RoAA During The Quarter

NII

Other income

Opex

Other provision

Tax provision

RoAA (RHS)

2.20
6.0

2.10

4.0

2.00

2.0

1.90
1.80

1.70
(2.0)

1.60

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

2QFY13

1.50

1QFY13

(4.0)

Source : Bank

Page | 7

AXIS BANK : RESULTS REVIEW 2QFY16

P/ABV Band Chart

4.5

800

4.0

3.0x

700

3.5

2.5x

600

Oct-15

Oct-07

Oct-15

Oct-14

Oct-13

Oct-12

0
Oct-11

0.0

Oct-10

100
Oct-09

0.5

Oct-08

200

Oct-07

1.0

1.5x

Oct-14

-1SD

300

Oct-13

400

Oct-12

Avg.

2.0x

Oct-11

1.5

500

Oct-10

2.0

+1SD

Oct-09

2.5

Oct-08

3.0

Source: Bank, HDFC sec Inst Research

Peer Valuations
BANK

CMP
(Rs)

AXSB
DCBB
FB
ICICIBC #
IIB
BOB
OBC
PNB
SBIN #
UNBK

522
91
57
284
954
168
140
134
249
167

Mcap
TP
(Rs Rating
(Rs)
bn)
1,237 BUY
618
26
NEU
98
97
BUY
78
1,645 BUY
382
505
BUY 1,040
373
BUY
196
42
BUY
249
249
BUY
167
1,882 BUY
344
106
BUY
205

ABV (Rs)

P/E (x)

FY15 FY16E FY17E

183
52
43
108
189
139
278
120
122
180

212
57
47
120
290
146
268
137
140
195

247
61
52
138
336
163
312
167
163
228

P/ABV (x)

ROAE (%)

ROAA (%)

FY15 FY16E FY17E

FY15 FY16E FY17E

FY15 FY16E FY17E

FY15 FY16E FY17E

16.8
13.4
9.6
12.2
28.2
11.0
8.4
8.1
11.1
5.9

2.85
1.73
1.32
2.18
5.04
1.21
0.50
1.12
1.60
0.93

17.8
14.0
13.7
14.8
19.0
9.2
3.8
8.5
11.4
10.1

1.74
1.32
1.28
1.80
1.83
0.49
0.34
0.53
0.69
0.48

14.2
15.7
13.0
10.3
23.4
8.7
4.5
6.8
8.6
4.7

12.1
17.5
10.2
8.3
18.1
6.9
3.2
5.1
6.7
3.7

2.46
1.60
1.21
1.89
3.28
1.15
0.52
0.98
1.35
0.85

2.11
1.48
1.09
1.59
2.84
1.03
0.45
0.80
1.12
0.73

18.0
9.8
9.1
14.9
17.4
10.6
6.9
9.4
13.2
11.8

18.2
8.0
10.5
15.9
16.6
12.2
9.1
11.4
14.6
13.4

1.75
0.90
0.84
1.85
1.95
0.57
0.39
0.57
0.77
0.57

1.74
0.65
0.95
1.96
2.02
0.65
0.51
0.68
0.85
0.64

Source: Company, HDFC sec Inst Research, # Adjusted for subsidiaries value

Page | 8

AXIS BANK : RESULTS REVIEW 2QFY16

Income Statement

Balance Sheet

(Rs mn)
FY13
FY14
FY15
FY16E
FY17E
Interest Earned
271,826 306,412 354,786 410,774 479,554
Interest Expended
175,163 186,895 212,545 239,706 280,468
Net Interest Income
96,663 119,516 142,241 171,068 199,086
Other Income
65,511 74,052 83,650 97,599 114,012
Fee Income (CEB)
50,251 53,938 61,211 71,234 85,691
Treasury Income
5,863
3,276
9,949 12,436 12,747
Total Income
162,174 193,569 225,892 268,666 313,099
Total Operating Exp
69,142 79,008 92,037 106,379 124,427
Employee Expense
23,770 26,013 31,150 37,138 44,048
PPOP
93,031 114,561 133,854 162,287 188,671
Provisions & Contingencies
17,501 21,074 23,286 33,914 37,912
Prov. for NPAs (incl. std prov.) 13,759 15,862 20,788 30,108 35,489
PBT
75,531 93,487 110,568 128,373 150,759
Provision for Tax
23,733 31,310 36,990 41,527 48,392
PAT
51,798 62,177 73,578 86,846 102,367

(Rs mn)
SOURCES OF FUNDS
Share Capital
Reserves
Shareholders' Funds
Savings
Current
Term Deposit
Total Deposits
Borrowings
Other Liabilities &
Provisions
Total Liabilities

Source: Bank, HDFC sec Inst Research,

FY13

FY14

FY15

FY16E

FY17E

4,680
4,698
4,741
4,741
4,741
326,399 377,506 442,024 514,981 602,070
331,079 382,205 446,765 519,722 606,811
637,777 777,759 882,921 1,041,847 1,229,379
483,221 486,864 561,082 631,217 725,900
1,405,138 1,544,822 1,780,416 1,976,834 2,557,184
2,526,136 2,809,446 3,224,419 3,649,898 4,512,463
439,511 502,909 797,583 956,561 1,151,138
108,881

137,889

150,557

169,914

194,448

3,405,607 3,832,449 4,619,324 5,296,094 6,464,862

APPLICATION OF FUNDS
Cash & Bank Balance
204,350 282,387 360,990 324,417 427,112
Investments
1,137,375 1,135,484 1,323,428 1,517,069 1,834,489
G-Secs
725,182 696,004 812,460 910,544 1,114,447
Advances
1,969,660 2,300,668 2,810,830 3,316,780 4,046,471
Fixed Assets
23,556
24,102
25,127
26,132
27,439
Other Assets
70,666
89,808
98,932 111,696 129,351
Total Assets
3,405,607 3,832,449 4,619,308 5,296,094 6,464,862
Source: Bank, HDFC sec Inst Research,

Page | 9

AXIS BANK : RESULTS REVIEW 2QFY16

Key Ratios
FY13
VALUATION RATIOS
EPS
Earnings Growth (%)
BVPS (ex reval.)
Adj. BVPS
ROAA (%)
ROAE (%) (ex reval.)
P/E (x)
P/ABV (x)
P/PPOP (x)
Dividend Yield (%)
PROFITABILITY
Yield on Advances (%)
Yield on Investment (%)
Cost of Funds (%)
Cost of Deposits (%)
Core Spread (%)
NIM (%)
OPERATING EFFICIENCY
Cost/Avg. Asset Ratio (%)
Core Cost-Income Ratio (%)
BALANCE SHEET STRUCTURE
Loan Growth (%)
Deposit Growth (%)
C/D Ratio (%)
Equity/Assets (%)
Equity/Advances (%)
CASA (%)
Capital Adequacy Ratio (CAR, %)
W/w Tier I CAR (%)

FY14

FY15

FY16E

FY17E

22.1
22.1
141.5
138.5
1.7
18.5
18.5
23.6
3.8
2.6

26.5
20.0
162.7
158.3
1.7
17.4
17.4
19.7
3.3
2.1

31.0
18.3
188.5
182.9
1.7
17.8
17.8
16.8
2.85
1.8

36.6
18.0
219.2
212.0
1.8
18.0
18.0
14.2
2.46
1.5

43.2
17.9
256.0
247.3
1.7
18.2
18.2
12.1
2.11
1.3

10.5
7.5
6.4
6.4
4.1
3.3

10.3
7.3
6.0
5.8
4.3
3.6

10.1
7.4
5.8
5.7
4.3
3.6

9.9
7.2
5.6
5.6
4.3
3.7

9.6
7.1
5.5
5.5
4.2
3.6

ASSET QUALITY
Gross NPLs (Rsm)
Net NPLs (Rsm)
Gross NPLs (%)
Net NPLs (%)
Coverage Ratio (%)
Provision/Avg. Loans (%)
ROAA TREE
Net Interest Income
Non-interest Income
Treasury Income
Operating Cost
Provisions
Provisions for NPAs
Tax
ROAA
Leverage (x)
ROAE

FY13

FY14

FY15

FY16E

FY17E

23,934
7,041
1.1
0.3
70.6
0.64

31,464
10,246
1.2
0.4
67.4
0.61

41,102
13,167
1.5
0.5
68.0
0.70

51,668
17,106
1.6
0.5
66.9
0.91

61,334
20,488
1.5
0.5
66.6
0.87

3.09%
2.09%
0.19%
2.21%
0.56%
0.38%
0.76%
1.65%
11.2
18.53%

3.30%
2.05%
0.09%
2.18%
0.58%
0.36%
0.87%
1.72%
10.1
17.43%

3.37%
1.98%
0.24%
2.18%
0.55%
0.42%
0.88%
1.74%
10.2
17.75%

3.45%
1.97%
0.25%
2.15%
0.68%
0.56%
0.84%
1.75%
10.3
17.97%

3.39%
1.94%
0.22%
2.12%
0.64%
0.55%
0.82%
1.74%
10.4
18.17%

Source: Bank, HDFC sec Inst Research,

2.2
44.2

2.2
41.5

2.2
42.6

2.1
41.5

2.1
41.4

16.0
14.8
78.0
9.7
16.8
44.4
17.0
12.2

16.8
11.2
81.9
10.0
16.6
45.0
16.1
12.6

22.2
14.8
87.2
9.7
15.9
44.8
15.1
12.1

18.0
13.2
90.9
9.8
15.7
45.8
15.0
12.4

22.0
23.6
89.7
9.4
15.0
43.3
14.1
11.9
Page | 10

AXIS BANK : RESULTS REVIEW 2QFY16

RECOMMENDATION HISTORY
Axis Bank

750

Date
20-Oct-14
19-Jan-15
23-Mar-15
30-Apr-15
25-Jul-15
28-Oct-15

TP

700
650
600
550
500

CMP
402
515
556
552
580
522

Reco
BUY
BUY
BUY
BUY
BUY
BUY

Target
470
600
630
632
655
618

450
400
350

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

May-15

Apr-15

Mar-15

Feb-15

Jan-15

Dec-14

Nov-14

Oct-14

300

Rating Definitions
BUY
: Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL
: Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Page | 11

AXIS BANK : RESULTS REVIEW 2QFY16

Disclosure:
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Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further
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Any holding in stock No
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Institutional Equities
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Board : +91-22-6171 7330 www.hdfcsec.com
Page | 12