Nearly 80% of Axis Bank’s new credit card business came through its digital channels as of December 31, 2020 compared to just 36% during the same period in the previous year, the bank said in its financial results for the third quarter of this fiscal year. The bank posted a net-profit of ₹1,117 crore at the end of Q3FY21, down by 36% year-on-year.
“As the economy turns around, we see fresh enthusiasm and positivity returning to both retail and corporate business. Digital has been one of our biggest strengths and we have fortified it further. With new collaborations with the best brands in their respective fields, we have rolled out some of the most innovative products and services for our customers, with unique features and benefits,” said Amitabh Chaudhury, managing director and chief executive officer, Axis Bank. During a media interaction on Wednesday, Chaudhury said that the bank will continue to focus on growing the credit card business profitably with the affluent segment contributing more, while retail spends are back to pre-COVID-19 levels.
During the second quarter of this fiscal, the banks’ management said that it would focus on targeting the affluent segment of customers for its credit card customers. The contribution of the affluent segment to the credit card business increased to 10.1% in December 2020 from 9% in the previous year, it said in its presentation for Q3Fy21. While the bank opened up its partnerships with online retailers, which brought in a significant amount of digital business, it has also partnered with Google Pay and Vistara airlines for co-branded credit cards and forex cards, Axis said. The bank has worked on rationalising the non profitable and high risk segment of its commercial card business, while the retail market share continues to remain steady with average card spends rebounding to pre-COVID levels, it said.
Digital banking performance
During the first nine-months of this fiscal year, Axis Bank has seen a wider engagement from its customers through its digital channels in the wake of the COVID-19 pandemic. The banks’ technology investments in the past are now being utilised by the majority of its clients. “Over the last few years, we have been going through a silent digital revolution. Our focus is on re imagining end-to-end journeys, aiming to become the go-to-bank for partnerships within the wider ecosystem,” Chaudhury said.
Digital sourcing and distribution during 9MFY21
- 73% of customers are digitally active
- 72% of new fixed deposits
- 71% of new savings accounts vs 59%
- 71% of new credit cards
- 56% of fresh personal loans disbursed
- 36% of new mutual fund sales
Payments performance in Q3FY21
- UPI: market share of 19% in transaction volumes
- Mobile banking: market share of 17%
- Credit cards: 11.6% market share in Q3Fy21 down from 12.4% in Q3Fy20, with 6.9 million credit cards in force
- Credit card spends: ₹15,838 crore in Q3FY21, down from ₹20,555 crore in Q3FY20
- Digital transactions: 88% of all transactions
- Debit cards: overall spends stood at ₹13,931 crore in Q3Fy21 compared to ₹14,021 crore in Q3FY20
- Bharat Bill Payments: Number 1 bank in terms of on-boarding billers
- FASTag: Number 4th bank in issuance
On the merchant payments side, or acquiring side, the bank has a market share of 13.4% with ₹52,000 crore worth of transactions as of November 2020 compared to 11.9% with ₹46,000 crore worth of transactions in December 2019. New deals with online players led to online channel contribution to overall transactions increasing to 57% as of December 2020 compared to 50% in the previous year.
Axis Bank’s total deposit base has grown by 11% to ₹6.54 lakh crore at the end of Q3FY21, compared to ₹5.91 lakh crore. The bank saw its current account business grow by 18% over the past year with over ₹92,570 crore in deposits, while it savings account business grew by 15% YoY to ₹1.89 lakh crore in Q3FY21.
Overall, loan advances grew by 6% YoY to ₹5.82 lakh crore in QeFY21, compared to ₹5.5 lakh crore in Q3FY20. While corporate lending grew by 2% YoY to ₹2 lakh crore, retail lending grew by 9% YoY to ₹3.17 lakh crore and lending to small-medium-enterprises grew by 4% YoY to ₹63,969 lakh crore.
The banks’ Gross non-performing asset (GNPA) ratio stood at 3.44% in Q3FY21 compared to 5% in Q3Fy20. Its net NPA ratio stood at 0.74% in Q3Fy21 compared to 2.09% in Q3Fy20. If not for the Supreme Court’s verdict in September 2020, which barred banks from declaring accounts as NPA post August 31, the GNPA ratio would be 4.55% and the NNPA ratio at 1.19% at the end of Q3FY21.
Axis Bank has restructured around ₹2,709 crore worth of loans or 0.42% of its customer assets, under the Reserve Bank of India’s restructuring scheme for COVID-19 related stress.
- Net Interest Income: ₹7,373 crore up by 14% YoY
- Net Interest Margin: 3.59% in Q3FY21 vs 3.57% in Q3FY20
- Operating Expenses: ₹5,053 crore, up by 12% YoY
- Operating profit: ₹5,754 crore, up by 10% YoY
- Net profit: ₹1,117 crore, down by 36% YoY
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