Skip to content

    Axis Bank

    AXISBANKGood
    Financial Services·25 Apr 2025
    Management Summary

    Axis Bank closed FY25 with healthy operating performance across NIMs, fees and costs. Q4 saw improved deposit momentum with 7% QOQ period-end growth. Asset quality remained stable with GNPA declining to 1.28%. Management flagged tightening of NPA classification criteria for FY26 and expects cards to stabilize while personal loans may take a few more quarters. The bank opened 500 branches in FY25 and achieved organic CET1 accretion of 93bps.

    Highlights

    8

    • Core operating profit up 11% YOY and 5% QOQ; FY25 core operating profit Rs 39,916 crores, up 13% YOY

    • NIM at 3.97%, improved 4bps QOQ; FY25 NIM at 3.98%, 18bps above through-cycle guidance of 3.80%

    • GNPA at 1.28%, declining 15bps YOY and 18bps QOQ; NNPA at 0.33%

    • Consolidated ROA at 1.88%, ROE at 17.11%; FY25 ROA 1.77%, ROE 16.89%

    • PAT at Rs 7,117 crores, up 13% QOQ; FY25 PAT Rs 26,373 crores, up 6% YOY

    • CET1 at 14.67%, net accretion of 93bps in FY25 through organic accretion

    • Period-end deposits grew 7% QOQ and 10% YOY; SA NTB deposits up 19% YOY

    • Announced more stringent classification criteria for FY26 - may marginally impact credit costs

    Key financials

    Metrics

    8

    Periods

    2

    Headline

    7
    • NIM
      4.0%
    • GNPA
      1.3%
    • NNPA
      33%
    • ROA (consolidated)
      1.9%
    • ROE (consolidated)
      17.1%

    FY25

    1
    • NIM
      4.0%

    Guidance & targets

    4
    CategoryTargetPriority
    NIM
    Through-cycle NIM
    3.80%
    		High
    Asset Quality
    Classification criteria tightening impact
    Marginal negative impact on credit costs in FY26
    		Medium
    Asset Quality
    Cards stabilization
    Stabilizing
    		High
    Capital
    Equity capital need
    No equity capital needed for growth or protection
    		High

    Risks & concerns

    6
    RiskSeverity

    Tightened NPA classification criteria may increase FY26 credit costs at the margin

    More stringent treatment of OTS accounts and classification criteria. Marginal impact expected. — Management acknowledged

    medium

    Personal loan portfolio needs a few more quarters to stabilize

    Early reads on underwriting corrections positive but vintages not matured enough for concrete outlook. — Both acknowledged

    medium

    PSLC costs of Rs 591 crores in Q4 for organic shortfalls in SMF and NCF categories

    Short-term challenges around MFI growth and gold loan PSL classification. Expect organic improvement. — Management acknowledged

    low

    Geopolitical uncertainty and tariff-related risks

    Elaborate bottom-up tariff assessment done; negligible current impact. — Both acknowledged

    low

    Areas of Evasion(2)

    • No guidance on FY26 growth or deposit growth
    • Would not quantify ECL transition impact specifically

    Q&A highlights

    4

    “We run a tightly managed duration on a full balance sheet basis. We transmit rate changes in the quarter in which policy rate changes.”

    Confirms tight asset-liability duration matching provides natural hedge against rate cycles

    asked by Chintan Joshi (Autonomous)

    1 min read5 chapters

    Detailed Narrative

    01

    Strong Q4 Caps a Solid FY25

    FY25 PAT at Rs 26,373 crores (up 6% YOY) with ROA/ROE of 1.77%/16.89%. Core operating profit grew 13% YOY to Rs 39,916 crores. Q4 specifically saw ROA of 1.88% and ROE of 17.11%. FY25 NIM at 3.98% maintained 18bps cushion over through-cycle guidance. Operating expenses grew only 6% YOY vs 30% in FY24.

    02

    Deposit Momentum Picks Up in Q4

    Period-end deposits grew 7% QOQ, stronger than recent quarters. QAB deposits grew 9% YOY. SA NTB deposits up 19% YOY with balances per account up 17% YOY. Bank opened 170 branches in Q4, 500 for full year. Burgundy AUM grew 10% YOY. LCR outflow rate improved 340bps over 3 years.

    03

    Asset Quality Improves; FY26 Classification Changes Flagged

    GNPA declined to 1.28% (down 15bps YOY, 18bps QOQ). NNPA at 0.33%. Gross slippages at Rs 4,805 crores, declining 12% QOQ. Net credit cost at 0.50% in Q4. However, management flagged more stringent classification criteria for FY26 particularly around OTS accounts. Rs 801 crores NARCL SR recovery booked; Rs 537 crores interest on SRs deferred.

    04

    RAROC-Driven Growth Strategy

    Loans grew 8% YOY and 3% QOQ with retail at 60%, corporate at 29%, CBG at 11%. CBG grew 14% YOY. In constrained deposit environment, bank prioritized assets with highest RAROC - LAP over home loans, for example. Retail disbursements grew 15% QOQ in Q4 from secured segments. 72% of retail book is secured.

    05

    ECL Readiness and Capital Position

    CET1 at 14.67% with 93bps organic accretion in FY25. Rs 5,012 crores ECL provision buffer not counted in capital (37bps cushion). Management expects marginal ECL transition impact on net worth. Rs 11,957 crores cumulative non-NPA provisions. Board declared Rs 1/share dividend.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.