Banks have seen a large rise mobile banking, net banking and Unified Payments Interface (UPI) transactions as consumer behavior changed in the wake of the pandemic. For Axis Bank, this has meant scaling and increasing investments in its information technology (IT) infrastructure in the past year.
The bank is in the midst of transitioning to a cloud first approach, it has launched cloud native applications and is in the process of moving 50 apps to the cloud environment, said Amitabh Chaudhury, Managing Director and Chief Executive Officer, Axis Bank during a media call on Wednesday. “We believe we are ahead of the curve as far as cloud strategy is considered. It allows us play-ability, it gives us more resilience for which we have to invest in and we can benefit from cloud technology tools provided by the players globally. We will move in this direction in quarter and years to come,” he said.
The bank posted a net profit of Rs 2,677 crore in the fourth quarter of the current fiscal, compared to a net loss of Rs 1,388 crore in the same period of the previous year, according to the financial results for the fourth quarter of this fiscal. Overall, the banks’ strong operating performance and scaling of tech initiatives has helped solidify its position as a leading digital bank. Its total operating and capital expenditure on technology increased by 79% in the last two years.
“Dedicated IT cloud infrastructure to exclusively handle high volume UPI transactions has resulted in Axis Bank achieving the lowest decline rates as a remitter when compared to peer banks,” the bank said.
In response to how the second wave of the COVID-19 pandemic would impact the bank going forward, Chaudhury said that corporates have already started to adopt a wait and watch approach as their attention is on employee well-being, and health and safety. “We have not seen a slowdown in collections in the early buckets, but it is likely to be impacted in the coming weeks. While these are early days, we do see an impact across business segments,” he said.
Digital Banking Highlights
Mobile banking spends stood at Rs 1,166 crore in Q4FY21 up by 169% from Rs 433 core in the same period a year ago. previous year. The bank processed Rs 1.63 lakh crore UPI transactions in Q4 FY21, up by 158% YoY from Rs 63,391 crore in the same period last year.
- 16% market share in Mobile transactions
- 17% market share in UPI transaction
- 57% of personal loans are disbursed digitally
- 73% of new credit cards are digitally sources
- 74% of customers are digitally active
- 88% of all transactions are digital
In the past year, the company launched a discount platform called Grabdeals, a ‘Buy Now Pay later’ product with Freecharge and also digital outward and digital forex card services. It has also integrated WhatsApp Banking for the savings account, credit cards, deposits and loans business.
Credit Card Spends
Overall, credit card spending remains lower than in the pre-COVID period. In Q4 FY21, overall credit card spends stood at Rs 16,967 crore compared to Rs 18,322 crore in the same period of last year. However, the banks’ credit card business has improved quarter after quarter after crashing in the first quarter of the last fiscal.
“Since Q2FY20, we have rationalised non profitable and high risk segment of Commercial card business impacting the overall market share; Contribution of high risk category in the overall Commercial Spends has reduced from 69% to 13% in last one year,” the bank said. Around 21% of the banks’ credit card sourcing in the last year came from its partnerships with Flipkart, Google Pay and Freecharge, it added.
Sumit Bali, President and Head of Retail Lending and Payments, Axis Bank said that overall credit card spends for the industry have been down. “Our share has gone up on an annual basis, which suggests that the industry has seen muted growth. Overall as the pie of digital payments increases, we will see credit card spends and penetration improve,” he said.
- Net Profit: Rs 2,677 crore in Q4 FY21, vs net loss of Rs 1,388 crore in Q4 FY20
- Net Interest Income: Rs 7,555 crore in Q4 FY21 vs Rs 6,808 crore in Q4 FY20
- Cumulative provisions: Rs 12,010 crore in Q4 FY21
- Advances: Rs 6.23 lakh crore in FY21 vs Rs 5.71 lakh crore in FY20
- Deposits: Rs 7.o7 lakh crore in FY21 vs Rs 6.4 lakh crore in FY20
- Gross NPA: 3.7% in FY21 vs 4.86% in FY20
- Net NPA: 1.05% in FY21 vs 1.56% in FY20
- Share of new credit cards sourced digitally more than doubles at Axis Bank, net profit stands at ₹1,117 crore in Q3FY21
- Axis Bank counts on digital to expand footprint in rural India
- Axis Banks’ digital channels aid in sourcing fresh deposits and loans
**Update (April 28, 2:00 pm). Headline updated based on editorial direction.