axis bank, 1q fy 2014

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Please refer to important disclosures at the end of this report 1

Particulars (` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)NII 2,865 2,665 7.5 2,180 31.4Pre-prov. profit 2,844 2,800 1.6 1,964 44.8

PAT 1,409 1,555 (9.4) 1,154 22.1Source: Company, Angel Research

Axis Bank reported a 22.1% yoy earnings growth for the quarter, which was in-

line with our estimates.Key highlights from the result were improvement in NIMs

(16bp qoq to 3.86%, though not sustainable as per the management)andstable

NPA ratios (Gross NPA ratio at 1.1 %, and Net NPA at 0.35%).

NIMs improve sequentially; Asset quality remains stable: During 1QFY2014, thebank reported a moderate growth in business, with advances and deposits

registering a growth of 15.8% and 7.1% yoy, respectively. Loan book growth was

primarily driven by strong traction in the retail and SME advances, which grew by

39.7% and 27.5% yoy, respectively. CASA deposits registered a healthy growth of

16.3% yoy, aided by a strong growth of 19.9% in savings deposits, despite a

moderate 10.6% growth in volative current deposits. The bank registered a

moderate growth in its non-interest income (excluding trading profits), largely

driven by a healthy growth in fee income from the Retail & DCM segments. The

bank registered trading gains of `440cr during the quarter as against `150cr in

1QFY2013. During the quarter, slippages and fresh restructuring taken together

amounted to more than `1,350cr, higher than the managements guidance of

around `1,000-1,200cr per quarter for the current fiscal. Along with sequentially

higher slippages, the bank also reported sequentially lower recoveries and

upgrades at `72cr compared to `205cr in 4QFY2013, which resulted in the

sequential increase of 4.0% and 12.2%, respectively, in its gross and net NPA

levels. The banks PCR increased by 100bp qoq to 80%. Restructuring book for

the bank came down sequentially to `4,211cr, primarily due to upgrades on

account of satisfactory performance and also due to repayments.

Outlook and valuation: In our view, Axis Banks current valuations at 1.3xFY2015 ABV are below our longer term fair value estimates. In the near term,

given the weak macro environment and cautious outlook for the sector, stocks

such as Axis Bank may undershoot fair value estimates, but from a relative

point-of-view compared to peers, it remains one of the preferred banks, in our

view, from a medium term perspective. We maintain our Buy recommendation,with a target price of `1,441.Key financials (Standalone)Y/E March (` cr) FY2012 FY2013 FY2014E FY2015ENII 8,018 9,666 12,045 14,472% chg 22.2 20.6 24.6 20.1

Net profit 4,242 5,179 6,117 7,349% chg 25.2 22.1 18.1 20.1

NIM (%) 3.1 3.2 3.3 3.3

EPS (`) 102.7 110.7 130.7 157.1P/E (x) 12.1 11.2 9.5 7.9

P/ABV (x) 2.2 1.8 1.5 1.3

RoA (%) 1.6 1.7 1.6 1.6

RoE (%) 20.3 18.5 17.2 18.1

Source: Company, Angel Research

BUYCMP `1,238

Target Price `1,441

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 33.9

MF / Banks / Indian Fls 8.8

FII / NRIs / OCBs 48.9

Indian Public / Others 8.4

Abs. (%) 3m 1yr 3yr

Sensex 5.0 16.2 11.2

AXSB (13.4) 19.5 (8.9)

Reuters Code AXSB.BO

AXSB@IN

BSE Sensex 20,128

Nifty 6,038

Avg. Daily Volume 171,267

Face Value (`) 10

Beta 1.2

52 Week High / Low 1549/927

Banking

Market Cap (`cr) 58,072

Vaibhav Agrawal022 3935 7800 Ext: 6808

[email protected]

Sourabh Taparia022 3935 7800 Ext: 6872

[email protected]

Harshal Patkar022 3935 7800 Ext: [email protected]

Axis BankPerformance Highlights

1QFY2014 Result Update | Banking

July 18, 2013

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Axis Bank | 1QFY2014 Result Update

July 18, 2013 2

Exhibit 1:1QFY2014 performance summary (Standalone)Particulars (` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy) FY2013 FY2012 % chgInterest earned 7,278 7,048 3.3 6,483 12.3 27,183 21,995 23.6- on Advances / Bills 5,189 4,899 5.9 4,625 12.2 19,166 15,379 24.6- on investments 2,015 2,030 (0.7) 1,806 11.6 7,747 6,394 21.2

- on balance with RBI & others 34 42 (18.1) 23 48.8 111 98 13.0

- on others 39 77 (49.2) 29 35.2 158 123 29.0

Interest Expended 4,413 4,383 0.7 4,303 2.5 17,516 13,977 25.3Net Interest Income 2,865 2,665 7.5 2,180 31.4 9,666 8,018 20.6Other income 1,781 2,007 (11.3) 1,336 33.4 6,551 5,420 20.9Other income excl. treasury 1,341 1,769 (24.2) 1,185 13.2 5,796 5,059 14.6

- Fee Income 1,317 1,618 (18.6) 1,154 14.1 5,521 4,727 16.8

- Trading gains 440 238 84.7 150 192.8 755 362 108.8

- Others 24 151 (84.1) 31 (22.3) 275 332 (17.0)

Operating income 4,647 4,672 (0.5) 3,515 32.2 16,217 13,438 20.7Operating expenses 1,803 1,872 (3.7) 1,552 16.2 6,914 6,007 15.1- Employee expenses 643 601 6.9 583 10.4 2,377 2,080 14.3

- Other Opex 1,160 1,271 (8.7) 969 19.7 4,537 3,927 15.5

Pre-provision Profit 2,844 2,800 1.6 1,964 44.8 9,303 7,431 25.2Provisions & Contingencies 712 595 19.6 259 175.2 1,750 1,143 53.1- Provisions for NPAs 572 145 294.5 261 119.2 1,138 861 32.2

- Other Provisions 140 450 (68.9) (2) NA 612 282 117.2

PBT 2,131 2,204 (3.3) 1,705 25.0 7,553 6,288 20.1Provision for Tax 722 649 11.3 551 31.0 2,373 2,046 16.0

PAT 1,409 1,555 (9.4) 1,154 22.1 5,179 4,242 22.1Source: Company, Angel Research

Exhibit 2:1QFY2014 Actual vs. Angel estimatesParticulars (` cr) Actual Estimates Var. (%)Net interest income 2,865 2,802 2.3

Other income 1,781 1,638 8.7

Operating income 4,647 4,440 4.6Operating expenses 1,803 1,918 (6.0)

Pre-prov. profit 2,844 2,522 12.7Provisions & cont. 712 415 71.5

PBT 2,131 2,107 1.2

Prov. for taxes 722 695 3.9

PAT 1,409 1,411 (0.2)Source: Company, Angel Research

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July 18, 2013 3

Exhibit 3:1QFY2014 performance analysis (Standalone)Particulars 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)Balance sheetAdvances (`cr) 198,151 196,966 0.6 171,146 15.8

Deposits (`cr) 238,441 252,614 (5.6) 222,631 7.1

Credit-to-Deposit Ratio (%) 83.1 78.0 513bp 76.9 623bp

Current deposits (` cr) 37,798 48,332 (21.8) 34,165 10.6

Saving deposits (`cr) 63,298 63,778 (0.8) 52,777 19.9

CASA deposits (` cr) 101,096 112,110 (9.8) 86,942 16.3

CASA ratio (%) 42.4 44.4 (198)bp 39.1 335bp

CAR (%) 16.9 17.0 (10)bp 13.0 387bp

Tier 1 CAR (%) 12.4 12.2 12bp 9.0 333bp

Profitability Ratios (%)Cost of funds 6.3 6.5 (19)bp 6.7 (44)bpReported NIM 3.9 3.7 16bp 3.4 49bp

Cost-to-income ratio 38.8 40.1 (127)bp 44.1 (534)bp

Asset qualityGross NPAs (` cr) 2,490 2,393 4.0 2,092 19.0

Gross NPAs (%) 1.1 1.1 4bp 1.1 4bp

Net NPAs (`cr) 790 704 12.2 605 30.6

Net NPAs (%) 0.4 0.3 3bp 0.3 4bp

Provision Coverage Ratio (%) 80.0 79.0 100bp 79.0 100bp

Slippage ratio (%) 1.4 0.9 45bp 1.1 31bp

Loan loss provision

to avg. assets (%)0.7 0.2 50bp 0.4 32bp


Moderate growth in Balance sheet continues

During 1QFY2014, the bank reported a healthy advance growth of 15.8% yoy,

while the deposits growth was deliberately contained at 7.1% yoy, as the bank had

raised capital in 4QFY2013 which was to be deployed. Loan book growth was

primarily aided by strong traction witnessed in the retail and SME loan book, which

grew by 39.7% and 27.5% yoy, respectively. Within retail advances, Auto loans

grew by 19.7% yoy and now constitute around 3.5% of the total loan book.

Growth in the large and mid-corporate segment remained moderate at 7.5% yoy.

During FY2014, the management has reiterated its guidance of above industry-

average loan growth, which would be driven by retail (home, auto) followed by

SME.

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July 18, 2013 4

Exhibit 4:Strong yoy growth in retail loans aided healthy adv. growthParticulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy) % to totalCorporate 99,818 98,239 1.6 92,887 7.5 50.4

SME 28,021 29,922 (6.4) 21,985 27.5 14.1

Agri 13,606 14,845 (8.3) 15,683 (13.2) 6.9

Retail 56,706 53,960 5.1 40,591 39.7 28.6

- Housing 36,859 35,074 5.1 26,384 39.7 18.6

- Auto 6,805 7,554 (9.9) 5,683 19.7 3.4

- Others 13,042 11,332 15.1 8,524 53.0 6.6

Total advances 198,151 196,966 0.6 171,146 15.8 100.0Source: Company, Angel Research

CASA deposits registered a healthy growth of 16.3% yoy, aided by a strong growth

of 19.9% yoy in savings deposits, even as growth in current deposits came in

moderate at 10.6% yoy. On a daily average basis, the overall CASA deposits grew

by 17% yoy, within which saving deposits grew by 20% yoy.

Period-end CASA ratio improved by 198bp sequentaily to 42.4%. The bank

registered a 18% yoy growth in its retail term deposits franchise, which reflects its

focus of building a stronger retail term deposits portfolio. As of 1QFY2014, retail

term deposits constitute 46% of total term deposits as against 42% as of

4QFY2013.

Exhibit 5:Average CASA deposits grew by 17% yoy


Exhibit 6:Period-end CASA ratio decreased to 42.4%


NIMs improve sequentially

During the quarter, the banks overall reported NIM improved by 16bp qoq to

3.86%, mainly due to a decline witnessed in cost of funds. Cost of funds declined

by 19bp to 6.26%, primarily on account of fresh capital raising done in February

2013 and also due to healthy growth in average CASA balances.

16 16 15 14

17

0

5

10

15

20

25

30

1QFY13 2QFY13 3QFY13 4QFY13 1QFY14

Reported yoy growth in average CASA balances (%)

39.140.5 40.0

44.4

42.4

30.0

32.0

34.0

36.0

38.0

40.0

42.0

44.0

46.0


(%)

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July 18, 2013 5

Exhibit 7:Cost of funds lower sequentially by 19bp...


Exhibit 8:....hence, NIMs higher by 16bp qoq


Moderate growth in non-interest income excluding tradingprofits, aided by strong growth in DCM; Trading profits witness

huge spike

During 1QFY2014, growth in fee income for the bank was moderate at 14.1%

yoy,which was largely aided by robust growth in fee income from segments such

as DCM and Retail. Fee income from the DCM (Debt Capital Markets) segment

grew strongly at 38.3% yoy, while Fee income from Retail segment grew by 22.7%

yoy which can be attributed to healthy loan book growth in this segment. Fee

Income from Corporate segment de-grew by 6.6% yoy.

Trading profits came in much higher at `440cr during the quarter as against

`238cr in 4QFY2013 and `150cr in 1QFY2013. Overall, the non-interest income

excluding trading profits registered a moderate growth of 13.2% yoy during

1QFY2014.

Exhibit 9:Fee income grew at moderate pace on a yoy basisParticulars (` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)Fee Income 1,317 1,618 (18.6) 1,154 14.1Corporate 382 469 (18.6) 409 (6.6)

DCM 329 356 (7.5) 238 38.3

Agri & SME 66 129 (49.1) 63 4.5

Business banking 132 129 1.7 110 19.7

Capital markets 13 16 (18.6) 12 9.7Retail 395 518 (23.7) 322 22.7

Trading profit 440 238 84.7 150 192.8Others 24 151 (84.1) 31 (22.3)Other income 1,781 2,007 (11.3) 1,336 33.4Other income excl. Trading Profits 1,341 1,769 (24.2) 1,185 13.2


6.706.54 6.52 6.45

6.26

3.5

4.5

5.5

6.5


(%)

3.373.46

3.57 3.70

3.86

2.4

2.7

3.0

3.3

3.6

3.9

4.2


(%)

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July 18, 2013 6

Higher slippages and lower recoveries/upgrades affect asset

quality performance

On the asset quality front, the bank reported slippages of `681cr during the

quarter (annualized slippage rate of 1.4%), as against `398cr reported in

4QFY2013. During the quarter, slippages and fresh restructuring taken together

amounted to more than `1,350cr, higher than the managements guidance of

around `1,000-1,200cr per quarter in the current fiscal. Along with sequentially

higher slippages, the bank also reported sequentially lower recoveries and

upgrades at `72cr compared to `205cr in 4QFY2013, which resulted in the

sequential increase of 4.0% and 12.2%, respectively, in its gross and net NPA

levels. Gross and Net NPA ratio were largely stable sequentially at 1.1% and

0.35%, respectively. The banks PCR increased by 100bp qoq to 80%.

Restructuring book for the bank came down sequentially to `4,211cr, primarily

due to upgrades on account of satisfactory performance and also due torepayments.

During FY2013, the management had guided for credit costs of around 85-90bp,

but ended the year with credit costs of 75bp. For FY2014, the management has

reiterated its guidance for credit costs of around 85-90bp, but having regards to

the asset quality performance in 1QFY2014 and considering current weak macro

developments, we have increased the provisioning estimates for FY2014 by 15%.

Exhibit 10:Slippages Ratio rise


Exhibit 11:...leading to greater net NPA ratio

Source: Company, Angel Research; Note: PCR including tech. write-offs

1.07

1.48

1.27

0.94

1.38

-

0.40

0.80

1.20

1.60


(%)

1.1

1.1

1.1

1.1

1.1

0.3

0.3

0.3

0.3

0.4

79.0 80.081.0

79.0 80.0

55.0

62.5

70.0

77.5

85.0

-

0.3

0.5

0.8

1.0

1.3


Gross NPAs (%) Net NPAs (%) NPA coverage (%, RHS)

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July 18, 2013 8

Investment arguments

Strong Retail & DCM businesses continue to support earnings

growth

Over the past ten years, Axis Bank has aggressively expanded its branch network

at around30%CAGR (~2,000 branches now), which has not only aided the bank

in steadily growing its retail liabilities profile, but has also laid a strong platform for

building up a sustainable retail assets portfolio. As of 1QFY2014, its CASA ratio

stands at around 42.4%, amongst the best in the industry; the share of retail

deposits (CASA + retail term) to total deposits stands at around 69% for the bank.

On the assets side, the retail advances to total loans for the bank stands at a

healthy 28.6%, up from ~20% as of FY2011.

Axis Bank has been able to sustain its healthy growth on the non-interest income

front and maintain the fee income contribution at a meaningful 1.9% of totalassets, primarily on account of 1) the strong traction in retail business which helps

it to generate a healthy fee income from the retail segment; and 2) robust growth

in fee income from the DCM (Debt Capital Markets) business. Hence, strong

traction in Retail & DCM business continues to support healthy earnings

momentum for the bank, despite current macro challenges.

even as corporate business remains subdued

Considering the current macro headwinds, Axis bank has adopted a consolidation

approach in its corporate loan portfolio. During 1QFY2014, its mid and Large

corporate book grew at amoderate pace of 7.4% yoy,which also resulted in de-

growth of 7.2% yoy in its fee income from the corporate segment. Few sectors like

Engineering, Iron & Steel, Infrastructure (incl. Power) and Textile have contributed a

large part of the incremental asset quality concerns for the banking industry.

Despite having around30% of its loan book exposed to these sectors, Axis bank

has been able to contain its quantum of stressed assets (NPA and restructured

assets). However, as indicated by the Management, nearly 70% of

its power exposure (ie ~6% of its total loan book) is towards projects which are

yet-to-be-commissioned over the next two years. This poses a concern on the

quality of these assets, unless there is a positive policy action on part of the

government.

Healthy capital adequacy

Axis Bank's tier-I capital adequacy came in at 12.35% as of 1QFY2014. The

capital infusion of `5,537cr in February, 2013 gives it enough headroom for credit

growth for the next three years. We expect the Management to meet its guidance

of above-industry average loan growth and improve its credit market share.

Outlook and valuation

Axis Banks aggressive branch expansion (at a CAGR of ~24%) over the past five

years, has not only aided it to steadily grow its retail liabilities profile, but has also

helped it build a sustainable retail assets portfolio. Healthy fee income from the

retail segment considering its strong retail business growth, coupled with robust fee

income from the DCM (Debt Capital Markets) business, aid it to maintain fee

income contribution at a meaningful 1.9% of total assets and support healthy

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July 18, 2013 9

earnings momentum for the bank. Consequently, notwithstanding moderate

concerns on the corporate book asset quality, we expect the retail business to drive

earnings at a healthy CAGR of 19.1% over FY2013-15E.

In our view, the current valuations at 1.3x FY2015 ABV are below our longer term

fair value estimates. In the near term, given the weak macro environment and

cautious outlook for the sector, stocks such as Axis Bank may undershoot fair value

estimates, but from a relative point-of-view compared to peers, it remains one of

the preferred banks, in our view, from a medium term perspective. We maintainour Buy recommendation, with a target price of `1,441.Exhibit 14:Key assumptionsParticulars (%) Earlier estimates Revised estimatesFY2014 FY2015 FY2014 FY2015Credit growth 21.0 23.0 20.0 22.0

Deposit growth 21.0 23.0 18.0 24.0

CASA ratio 43.5 43.4 44.3 43.9

NIMs 3.2 3.2 3.3 3.3

Other income growth 13.7 19.3 10.4 16.3

Growth in staff expenses 18.1 21.3 18.0 18.8

Growth in other expenses 18.1 21.3 18.0 18.8

Slippages 1.3 1.3 1.4 1.4

Coverage ratio 80.0 80.0 80.0 80.0

Source: Angel Research

Exhibit 15:Change in estimatesParticulars (` cr) FY2014 FY2015Earlierestimates Revisedestimates Var. (%) Earlierestimates Revisedestimates Var. (%)NII 11,791 12,045 2.2 14,379 14,472 0.7

Non-interest income 7,446 7,234 (2.8) 8,883 8,414 (5.3)

Operating income 19,237 19,280 0.2 23,261 22,886 (1.6)Operating expenses 8,162 8,159 (0.0) 9,897 9,689 (2.1)

Pre-prov. profit 11,075 11,121 0.4 13,365 13,198 (1.2)Provisions & cont. 1,731 1,990 15.0 2,084 2,229 6.9

PBT 9,344 9,130 (2.3) 11,281 10,969 (2.8)Prov. for taxes 3,084 3,013 (2.3) 3,723 3,620 (2.8)

PAT 6,261 6,117 (2.3) 7,558 7,349 (2.8)Source: Angel Research

Exhibit 16:Angel EPS forecast vs. consensusYear Angel forecast Bloomberg consensus Var. (%)FY2014E 130.7 131.1 (0.2)

FY2015E 157.1 154.4 1.7

Source: Bloomberg, Angel Research

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July 18, 2013 10

Exhibit 17:P/ABV band


Exhibit 18:Discount to HDFC Bank (%)


0

400

800

1,200

1,600

2,000

2,400

2,800

3,200

Apr-06

Sep-0

6

Feb-0

7

Jul-07

Dec-0

7

May-0

8

Oct-08

Mar-09

Aug-0

9

Jan-1

0

Jun-1

0

Nov-1

0

Apr-11

Sep-1

1

Feb-1

2

Jul-12

Dec-1

2

May-1

3

Oct-13

Mar-14

Price (`) 0.8x 1.4x 2x 2.6x 3.2x

(75.0)

(60.0)

(45.0)

(30.0)

(15.0)

-

Dec-0

7

Jun-

08

Dec-0

8

Jun-

09

Dec-0

9

Jun-

10

Dec-1

0

Jun-

11

Dec-1

1

Jun-

12

Dec-1

2

Jun-

13

(%)

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July 18, 2013 11

Exhibit 19:Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%) FY2015EP/ABV (x) FY2015E Tgt.P/ABV (x) FY2015EP/E (x) FY13-15E EPSCAGR (%) FY2015ERoA (%) FY2015ERoE (%)AXSB Buy 1,238 1,441 16 1.3 1.6 7.9 19.1 1.6 18.1FEDBK Neutral 379 - - 0.8 - 6.7 7.5 1.1 13.1

HDFCBK Accumulate 684 745 9 3.2 3.5 15.2 26.3 1.9 22.8

ICICIBK Buy 985 1,160 18 1.4 1.7 9.9 17.4 1.6 16.2

SIB Neutral 23 - - 0.9 - 5.4 5.7 0.9 16.2

YESBK Neutral 440 - - 1.8 - 8.9 17.1 1.3 22.8

ALLBK Accumulate 88 95 8 0.4 0.4 2.7 18.3 0.7 13.6

ANDHBK Neutral 79 - - 0.5 - 3.5 (0.3) 0.7 13.2

BOB Accumulate 566 642 13 0.6 0.7 3.9 16.8 0.9 16.0

BOI Accumulate 218 236 8 0.5 0.5 3.2 21.6 0.7 15.1

BOM Accumulate 50 54 7 0.6 0.6 3.9 10.0 0.6 15.3

CANBK Neutral 330 - - 0.5 - 3.8 15.4 0.8 14.2CENTBK Neutral 63 - - 0.5 - 3.3 52.3 0.6 14.3

CRPBK Accumulate 329 360 10 0.4 0.5 3.1 5.7 0.7 14.2

DENABK Neutral 69 - - 0.4 - 2.8 3.7 0.7 14.7

IDBI Neutral 70 - - 0.4 - 3.1 27.1 0.8 13.5

INDBK Neutral 108 - - 0.4 - 2.6 7.0 0.9 14.7

IOB Neutral 49 - - 0.3 - 2.5 78.9 0.6 13.0

J&KBK Neutral 1,243 - - 0.9 - 5.9 (1.7) 1.2 16.8

OBC Accumulate 179 203 13 0.4 0.4 2.9 17.0 0.8 12.9

PNB Accumulate 637 718 13 0.6 0.7 3.6 14.5 1.1 16.5

SBI Accumulate 1,824 2,077 14 1.0 1.2 6.4 17.5 1.0 17.0

SYNBK Accumulate 111 121 8 0.6 0.6 4.0 (8.5) 0.6 14.6

UCOBK Reduce 74 63 (14) 0.8 0.7 4.7 67.5 0.6 13.6

UNBK Accumulate 163 178 9 0.5 0.6 3.5 14.7 0.7 15.2

UTDBK Neutral 46 - - 0.3 - 2.3 54.6 0.6 14.7

VIJAYA Neutral 46 - - 0.5 - 4.3 9.5 0.4 11.5

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

Company Background

Axis Bank is India's third-largest private sector bank after ICICI Bank and HDFC

Bank. The bank was promoted by government institutions, led by UTI (SUUTI holds20.8% stake currently, which will eventually be divested). The bank has an

extensive network of 2,021 branches and 11,488 ATMs spread across 1,300

centers (~55% in metro and urban regions). The bank's strong growth has been

backed by robust retail branch expansion, strong corporate relationships and a

wide range of fee income products.

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July 18, 2013 12

Income statement (Standalone)

Y/E March (` cr) FY09 FY10 FY11 FY12 FY13 FY14E FY15ENet Interest Income 3,686 5,004 6,563 8,018 9,666 12,045 14,472- YoY Growth (%) 42.6 35.8 31.1 22.2 20.6 24.6 20.1Other Income 2,834 3,946 4,632 5,420 6,551 7,234 8,414- YoY Growth (%) 57.8 39.2 17.4 17.0 20.9 10.4 16.3

Operating Income 6,520 8,950 11,195 13,438 16,217 19,280 22,886- YoY Growth (%) 48.8 37.3 25.1 20.0 20.7 18.9 18.7

Operating Expenses 2,858 3,710 4,779 6,007 6,914 8,159 9,689- YoY Growth (%) 32.6 29.8 28.8 25.7 15.1 18.0 18.8

Pre - Provision Profit 3,662 5,241 6,416 7,431 9,303 11,121 13,198- YoY Growth (%) 64.5 43.1 22.4 15.8 25.2 19.5 18.7

Prov. & Cont. 877 1,389 1,280 1,143 1,750 1,990 2,229- YoY Growth (%) 51.3 58.5 (7.9) (10.7) 53.1 13.7 12.0

Profit Before Tax 2,785 3,851 5,136 6,288 7,553 9,130 10,969- YoY Growth (%) 69.2 38.3 33.3 22.4 20.1 20.9 20.1

Prov. for Taxation 970 1,337 1,747 2,046 2,373 3,013 3,620- as a % of PBT 34.8 34.7 34.0 32.5 31.4 33.0 33.0

PAT 1,815 2,515 3,388 4,242 5,179 6,117 7,349- YoY Growth (%) 69.5 38.5 34.8 25.2 22.1 18.1 20.1

Balance sheet (Standalone)Y/E March (` cr) FY09 FY10 FY11 FY12 FY13 FY14E FY15EShare Capital 359 405 411 413 468 468 468Reserve & Surplus 9,855 15,639 18,588 22,395 32,640 37,359 43,035

Deposits 117,374 141,300 189,238 220,104 252,614 298,084 369,624

- Growth (%) 33.9 20.4 33.9 16.3 14.8 18.0 24.0

Borrowings 10,185 10,014 19,275 23,498 31,412 41,893 57,863

Tier 2 Capital 5,334 7,156 6,993 10,574 12,540 12,226 11,920

Other Liab. & Prov. 4,613 6,134 8,209 8,643 10,888 12,787 15,907

Total Liabilities 147,721 180,648 242,713 285,628 340,561 402,816 498,818Cash Balances 9,419 9,482 13,886 10,703 14,792 13,414 16,633

Bank Balances 5,598 5,722 7,522 3,231 5,643 6,042 7,482

Investments 46,330 55,975 71,992 93,192 113,738 135,940 172,748

Advances 81,557 104,341 142,408 169,760 196,966 236,359 288,358

- Growth (%) 36.7 27.9 36.5 19.2 16.0 20.0 22.0

Fixed Assets 1,073 1,222 2,273 2,259 2,356 2,703 3,246

Other Assets 3,744 3,906 4,632 6,483 7,067 8,358 10,350

Total Assets 147,721 180,648 242,713 285,628 340,561 402,816 498,818- Growth (%) 34.8 22.3 34.4 17.7 19.2 18.3 23.8

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Ratio analysis (Standalone)

Y/E March FY09 FY10 FY11 FY12 FY13 FY14E FY15EProfitability ratios (%)NIMs 3.0 3.1 3.2 3.1 3.2 3.3 3.3Cost to Income Ratio 43.8 41.4 42.7 44.7 42.6 42.3 42.3

RoA 1.4 1.5 1.6 1.6 1.7 1.6 1.6

RoE 19.1 19.2 19.3 20.3 18.5 17.2 18.1

B/S ratios (%)CASA Ratio 43.1 46.7 41.1 41.5 44.4 44.3 43.9

Credit/Deposit Ratio 69.5 73.8 75.3 77.1 78.0 79.3 78.0

CAR 13.7 15.8 12.7 13.7 17.0 15.9 14.3

- Tier I 9.3 11.2 9.4 9.4 12.2 11.9 11.1

Asset Quality (%)Gross NPAs 1.1 1.3 1.1 1.1 1.2 1.9 2.4

Net NPAs 0.4 0.4 0.3 0.3 0.4 0.5 0.5

Slippages 1.5 2.2 1.4 1.3 1.2 1.4 1.4

Loan Loss Prov. /Avg. Assets 0.6 0.8 0.5 0.3 0.4 0.4 0.4

Provision Coverage 63.6 72.4 80.9 81.0 79.0 80.0 80.0

Per Share Data (`)EPS 50.6 62.1 82.5 102.7 110.7 130.7 157.1

ABVPS (75% cover.) 281.6 393.8 462.5 551.5 705.2 808.3 929.7

DPS 10.0 12.0 14.0 16.0 18.0 25.5 30.5

Valuation RatiosPER (x) 24.5 20.0 15.0 12.1 11.2 9.5 7.9

P/ABVPS (x) 4.4 3.1 2.7 2.2 1.8 1.5 1.3

Dividend Yield 0.8 1.0 1.1 1.3 1.5 2.1 2.5

DuPont AnalysisNII 2.9 3.0 3.1 3.0 3.1 3.2 3.2

(-) Prov. Exp. 0.7 0.8 0.6 0.4 0.6 0.5 0.5

Adj. NII 2.2 2.2 2.5 2.6 2.5 2.7 2.7

Treasury 0.2 0.4 0.2 0.0 0.2 0.1 0.1

Int. Sens. Inc. 2.4 2.7 2.7 2.6 2.7 2.8 2.8

Other Inc. 2.0 2.0 2.0 2.0 1.9 1.8 1.8

Op. Inc. 4.4 4.6 4.7 4.7 4.6 4.7 4.6

Opex 2.2 2.3 2.3 2.3 2.2 2.2 2.1PBT 2.2 2.3 2.4 2.4 2.4 2.5 2.4

Taxes 0.8 0.8 0.8 0.8 0.8 0.8 0.8

RoA 1.4 1.5 1.6 1.6 1.7 1.6 1.6Leverage 13.6 12.5 12.1 12.6 11.2 10.5 11.1

RoE 19.1 19.2 19.3 20.3 18.5 17.2 18.1

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axis bank, 1q fy 2014

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