Axis Bank 4Q FY 2013

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

Particulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)NII 2,665 2,495 6.8 2,146 24.2Pre-prov. profit 2,800 2,362 18.6 2,038 37.4

PAT 1,555 1,347 15.4 1,277 21.8Source: Company, Angel Research

During 4QFY2013, Axis Bank reported a 21.8% yoy growth in its net profit, which

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

NIMs (13bp qoq to 3.7%), robust growth in fee income (22.0% yoy) and stable NPA

ratios (Gross NPA at 1.06%, and Net NPA ratio at 0.32%).

NIMs improve sequentially; Asset quality remains stable: During 4QFY2013,the bank reported a healthy growth in its business, with advances and deposits

registering a growth of 16.0% and 14.8% yoy, respectively. Growth in the loan

book was primarily on account of strong traction witnessed in the retail loan book,

which grew by 43.6% yoy, while SME loans grew at a robust 25.7% yoy. CASA

deposits grew at a healthy pace of 22.6% yoy, aided by a robust growth of 23.4%

and 21.6% yoy in savings deposits and current deposits, respectively. The bank

registered a robust 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 `238cr during the quarter and used the

opportunity to create a contingency provision of `240cr. On the asset quality front,

slippages came in lower sequentially at `398cr, compared to `541cr witnessed in

3QFY2013, however, slippages and fresh restructuring, taken together amounted

to ~`1,200cr during the quarter, higher than the Managements guidance of

around `1,000cr. Going forward, the Management expects slippages and

restructuring per quarter to remain at similar levels for the next few quarters. Along

with sequentially lower slippages, the bank also reported sequentially higher

recoveries and upgrades at `205cr, which helped it to contain the sequential

increase in its gross and net NPA levels, on an absolute basis, to 5.2% and 3.7%,

respectively. The banks PCR dipped by 200bp qoq to 79%. Of the total

restructuring during the quarter (`791cr), nearly `500cr came from Engineering

and Iron & Steel. Its total restructured book, as of 4QFY2013 stands at `4,368cr.

Outlook and valuation:Axis Bank is trading at 1.6x FY2015E ABV more than50% discount to HDFC Bank vs. an average discount of around 38% over the past

five years (which we believe over-discounts asset quality concerns). We remain

positive on the bank, owing to its attractive CASA franchise, multiple sources of

sustainable fee income and reasonable growth outlook. We maintain our Buyrecommendation, with a target price of `1,737.Key financials (Standalone)Y/E March (` cr) FY2012 FY2013 FY2014E FY2015ENII 8,018 9,666 11,745 13,713% chg 22.2 20.6 21.5 16.8

Net profit 4,242 5,179 6,742 7,556% chg 25.2 22.1 30.2 12.1

NIM (%) 3.1 3.2 3.3 3.3

EPS (`) 102.7 110.7 144.1 161.5P/E (x) 14.1 13.0 10.0 8.9

P/ABV (x) 2.6 2.0 1.8 1.6

RoA (%) 1.6 1.7 1.8 1.7

RoE (%) 20.3 18.5 18.9 18.3

Source: Company, Angel Research

BUYCMP `1,503

Target Price `1,737

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 33.9

MF / Banks / Indian Fls 8.5

FII / NRIs / OCBs 49.3Indian Public / Others 8.3

Abs. (%) 3m 1yr 3yr

Sensex (3.5) 13.2 9.7

AXSB 8.6 37.3 21.9

Banking

Market Cap (` cr) 70,355

Beta 1.2

52 Week High / Low 1519/922

Avg. Daily Volume 182,570

Face Value (`) 10BSE Sensex 19,407

Nifty 5,916

Reuters Code AXSB.BO

AXSB@IN

Vaibhav Agrawal022 3935 7800 Ext: 6808

[email protected]

Sourabh Taparia022 3935 7800 Ext: 6872

[email protected]

Akshay Narang022 3935 7800 Ext: 6829

[email protected]

Harshal Patkar022 3935 7800 Ext: [email protected]

Axis BankPerformance Highlights

4QFY2013 Result Update | Banking

April 25, 2013

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Axis Bank | 4QFY2013 Result Update

April 25, 2013 2

Exhibit 1:4QFY2013 performance summary (Standalone)Particulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy) FY2013 FY2012 % chgInterest earned 7,048 6,965 1.2 6,060 16.3 27,183 21,995 23.6- on Advances / Bills 4,899 4,907 (0.2) 4,258 15.1 19,166 15,379 24.6- on investments 2,030 2,014 0.8 1,738 16.8 7,747 6,394 21.2

- on balance with RBI & others 42 25 68.8 24 74.4 111 98 13.0

- on others 77 19 301.5 41 88.7 158 123 29.0

Interest Expended 4,383 4,470 (2.0) 3,914 12.0 17,516 13,977 25.3Net Interest Income 2,665 2,495 6.8 2,146 24.2 9,666 8,018 20.6Other income 2,007 1,615 24.3 1,588 26.4 6,551 5,420 20.9Other income excl. treasury 1,769 1,456 21.5 1,442 22.7 5,796 5,059 14.6

- Fee Income 1,618 1,405 15.1 1,327 22.0 5,521 4,727 16.8

- Trading gains 238 159 49.6 146 63.1 755 362 108.8

- Others 151 51 196.8 115 31.5 275 332 (17.0)

Operating income 4,672 4,110 13.7 3,734 25.1 16,217 13,438 20.7Operating expenses 1,872 1,749 7.1 1,696 10.4 6,914 6,007 15.1- Employee expenses 601 615 (2.2) 530 13.6 2,377 2,080 14.3

- Other Opex 1,271 1,134 12.1 1,167 8.9 4,537 3,927 15.5

Pre-provision Profit 2,800 2,362 18.6 2,038 37.4 9,303 7,431 25.2Provisions & Contingencies 595 387 53.9 139 327.4 1,750 1,143 53.1- Provisions for NPAs 145 325 (55.4) 127 14.2 1,138 861 32.2

- Other Provisions 450 62 628.4 12 3,567.3 612 282 17.2

PBT 2,204 1,975 11.6 1,898 16.1 7,553 6,288 20.1Provision for Tax 649 627 3.5 621 4.5 2,373 2,046 16.0

PAT 1,555 1,347 15.4 1,277 21.8 5,179 4,242 22.1Source: Company, Angel Research

Exhibit 2:4QFY2013 Actual vs. Angel estimatesParticulars (` cr) Actual Estimates Var. (%)Net interest income 2,665 2,682 (0.7)

Other income 2,007 1,812 10.8

Operating income 4,672 4,494 3.9Operating expenses 1,872 1,867 0.3

Pre-prov. profit 2,800 2,627 6.6Provisions & cont. 595 359 65.8

PBT 2,204 2,268 (2.8)

Prov. for taxes 649 747 (13.1)

PAT 1,555 1,521 2.2Source: Company, Angel Research

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Exhibit 3:4QFY2013 performance analysis (Standalone)Particulars 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)Balance sheetAdvances (`cr) 196,966 179,504 9.7 169,760 16.0

Deposits (`cr) 252,614 244,501 3.3 220,104 14.8

Credit-to-Deposit Ratio (%) 78.0 73.4 455bp 77.1 84bp

Current deposits (` cr) 48,332 40,236 20.1 39,754 21.6

Saving deposits (`cr) 63,778 57,521 10.9 51,668 23.4

CASA deposits (`cr) 112,110 97,757 14.7 91,422 22.6

CASA ratio (%) 44.4 40.0 440bp 41.5 284bp

CAR (%) 17.0 13.7 327bp 13.7 334bp

Tier 1 CAR (%) 12.2 8.8 340bp 9.5 278bp

Profitability Ratios (%)Cost of funds 6.5 6.5 (7)bp 6.5 0bpReported NIM 3.7 3.6 13bp 3.6 15bp

Cost-to-income ratio 40.1 42.5 (247)bp 45.4 (536)bp

Asset qualityGross NPAs (`cr) 2,393 2,275 5.2 1,806 32.5

Gross NPAs (%) 1.1 1.1 (4)bp 0.9 12bp

Net NPAs (`cr) 704 679 3.7 473 49.0

Net NPAs (%) 0.3 0.3 (1)bp 0.3 7bp

Provision Coverage Ratio (%) 79.0 81.0 (200)bp 81.0 (200)bp

Slippage ratio (%) 0.9 1.3 (34)bp 1.4 (51)bp

Loan loss provision

to avg. assets (%)0.2 0.4 (24)bp 0.2 (1)bp


Healthy growth in Balance sheet continues

During 4QFY2013, the bank reported a healthy growth in business, with advances

and deposits registering a growth of 16.0% and 14.8% yoy, respectively. The

growth in the loan book was primarily on account of strong traction witnessed in

the retail loan book which grew by 43.6% yoy, within which, auto loans grew by

54.7% yoy and now constitute around 4% of the total loan book. The SME loan

book also grew at a robust pace of 25.7% yoy during the quarter.

Growth in the large and mid-corporate segment remained moderate at 7.9% yoy.

The Management has reiterated its guidance of above industry-average loan

growth during FY2014, with primary focus on retail (home, auto) followed by SME.

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Exhibit 4:Strong yoy growth in retail loans aided healthy adv. growthParticulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy) % to totalCorporate 98,239 94,580 3.9 91,054 7.9 49.9

SME 29,922 25,295 18.3 23,796 25.7 15.2

Agri 14,845 11,561 28.4 17,340 (14.4) 7.5

Retail 53,960 48,068 12.3 37,570 43.6 27.4

- Housing 35,074 32,686 7.3 28,178 24.5 17.8

- Auto 7,554 5,768 31.0 4,884 54.7 3.8

- Others 11,332 9,614 17.9 4,508 151.3 5.8

Total advances 196,966 179,504 9.7 169,760 16.0 100.0Source: Company, Angel Research

CASA deposits registered a healthy growth of 22.6% yoy, aided by a strong growth

of 23.4% in savings deposits and a healthy 21.5% growth in current deposits. On

a daily average basis, the overall CASA deposits grew by 14% yoy, within which

saving deposits grew by 20%.

Period-end CASA ratio improved by 400bp sequentaily to 44%. On a daily

average basis, the CASA ratio remianed stable sequentailly at 36%. The bank

registered a 24% yoy growth in its retail term deposits franchise, which reflects its

focus of building a stronger retail term deposits portfolio. As of 4QFY2013, retail

term deposits constitute 42% of total term deposits as against 39% as of

4QFY2012.

Exhibit 5:Average CASA deposits grew by 14% yoy


Exhibit 6:Period-end CASA ratio increased to 44.4%


NIMs improve sequentially

During the quarter, the banks overall reported NIM improved by 13bp qoq to

3.7%, mainly due to a decline witnessed in cost of funds. The cost of funds

declined marginally by 7bp to 6.45% on account of freshly capital raising done in

February 2013.

24

16 16 15 14

-

5

10

15

20

25

30

4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

Reported yoy growth in average CASA balances (%)

41.5

39.140.5 40.0

44.4

30.0

32.0

34.0

36.0

38.0

40.0

42.0

44.0

46.0


(%)

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April 25, 2013 5

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


Exhibit 8:....hence, NIM higher by 13bp qoq


Healthy growth in non-interest income excluding trading profits,largely aided by robust growth in fee income from Retail and

DCM segments

During 4QFY2013, growth in fee income for the bank remained healthy at 22.0%

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

as Retail. Fee income from the Retail segment grew by 37.3% yoy which can be

attributed to healthy loan book growth in this segment. Growth in fee income from

the DCM (Debt Capital Markets) segment came in strongly at 43.0% yoy.

Trading profits came in much higher at `238cr during the quarter as against

`159cr in 3QFY2013 and `146cr in 4QFY2012. Overall, the non-interest income

excluding trading profits registered a healthy growth of 22.7% yoy during

4QFY2013.

Exhibit 9:Fee income grew at healthy pace on a yoy basisParticulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)Fee Income 1,618 1,405 15.1 1,327 22.0Corporate 469 464 1.2 442 6.2

DCM 356 281 26.7 249 43.0

Agri & SME 129 84 53.5 117 10.6

Business banking 129 112 15.2 128 1.1

Capital markets 16 14 15.2 13 24.5

Retail 518 450 15.2 377 37.3Trading profit 238 159 49.6 146 63.1Others 151 51 196.8 115 31.5Other income 2,007 1,615 24.3 1,588 26.4Other income excl. Trading Profits 1,769 1,456 21.5 1,442 22.7


6.456.70

6.54 6.52 6.45

3.5

4.5

5.5

6.5


(%)

3.553.37

3.463.57

3.70

2.4

2.7

3.0

3.3

3.6

3.9


(%)

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April 25, 2013 6

Sequentially, lower slippages and higher recoveries/upgrades

result in stable NPA ratios

On the asset quality front, the slippages for the bank during the quarter came in at

`398cr, as against `514cr witnessed in 3QFY2013. However, slippages and fresh

restructuring taken together amounted to ~`1,200cr during the quarter, higher

than the Managements guidance of around `1,000cr. Going forward, the

Management expects slippages and restructuring per quarter to remain at similar

levels for the next few quarters.

Along with sequentially lower slippages, the bank also reported sequentially higher

recoveries and upgrades at `205cr, which helped it to contain the sequential

increase in its gross and net NPA levels, on an absolute basis, to 5.2% and 3.7%,

respectively. The gross and net NPA ratio remained stable sequentially at 1.06%

and 0.32%, respectively.

The banks PCR dipped by 200bp qoq to 79%. Of the total restructuring during the

quarter (`791cr), nearly`500cr came from Engineering and Iron & Steel. Its total

restructured book, as of 4QFY2013 stands at `4,368cr.

Exhibit 10:Slippages Ratio lower sequentially...


Exhibit 11:...leading to sequentially stable NPA ratios

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

Exhibit 12:Steady Network expansion continues

Source: Company, Angel Research;

Exhibit 13:Cost-to-income ratio moderates to 40.1%


1.44

1.07

1.48

1.27

0.94

-

0.40

0.80

1.20

1.60


(%)

0.9

1.1

1.1

1.1

1.1

0.3

0.3

0.3

0.3

0.3

81.079.0 80.0

81.079.0

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)

1,6

22

1,6

65

1,7

41

1,7

87

1,9

47

9,924 10,33710,297 10,363

11,245

-

2,500

5,000

7,500

10,000

12,500

400

800

1,200

1,600

2,000

2,400


Branches ATMs (RHS)

2.4 2.2 2.4 2.3 2.3

45.4

44.1 44.4

42.5

40.1

38.0

41.0

44.0

47.0

2.0

2.1

2.2

2.3

2.4

2.5


Opex to avg. assets (%) CIR (%, RHS)

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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 around 30% 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 4QFY2013, its CASA ratio

stands at around 44%, amongst the best in the industry; the share of retail deposits

(CASA + retail term) to total deposits stands at around 68% for the bank. On the

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

27.3%, 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 4QFY2013, its Mid and Large

corporate book grew at a moderate pace of 7.9% yoy, which also resulted in a

muted 6.2% yoy growth 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 around 30% 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 improved to 12.2% as of 4QFY2013, as it

raised `5,537cr in February, 2013. The capital infusion gives it enough headroom

for credit growth for the next three years, even if 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 ~25%) 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

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April 25, 2013 8

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

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 17.3% over FY2013-15E.

Axis Bank is trading at 1.6x FY2015E ABV, ie at a more than 50% discount vs an

average discount of around 38% over the past five years to HDFC Bank (which we

believe over-discounts asset quality concerns). We remain positive on Axis Bank,

owing to its attractive CASA franchise, multiple sources of sustainable fee income

and reasonable growth outlook. We maintain our Buy recommendation, with atarget price of `1,737.Exhibit 14:Key assumptionsParticulars (%) Earlier estimates Revised estimatesFY2014 FY2015 FY2014 FY2015Credit growth 21.0 23.0 21.0 23.0

Deposit growth 19.0 23.0 19.0 23.0

CASA ratio 41.3 41.2 44.2 44.2

NIMs 3.3 3.3 3.3 3.2

Other income growth 12.1 21.6 9.9 21.6

Growth in staff expenses 18.1 22.5 18.1 22.5

Growth in other expenses 18.1 22.5 18.1 22.5

Slippages 1.4 1.4 1.3 1.3

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 11,776 11,857 0.7 13,960 13,953 (0.0)

Non-interest income 7,126 7,198 1.0 8,665 8,756 1.1

Operating income 18,901 19,055 0.8 22,625 22,710 0.4Operating expenses 8,156 8,162 0.1 9,992 9,999 0.1

Pre-prov. profit 10,745 10,893 1.4 12,634 12,711 0.6Provisions & cont. 1,650 1,631

(1.2)1,983 1,914

(3.5)

PBT 9,095 9,262 1.8 10,650 10,797 1.4

Prov. for taxes 3,091 3,148 1.8 3,620 3,670 1.4

PAT 6,003 6,114 1.8 7,030 7,127 1.4Source: Angel Research

Exhibit 16:Angel EPS forecast vs. consensusYear Angel forecast Bloomberg consensus Var. (%)FY2014E 130.7 133.1 (1.8)

FY2015E 152.3 157.4 (3.2)

Source: Bloomberg, Angel Research

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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

Mar-08

Jun-0

8

Sep-0

8

Dec-0

8

Mar-09

Jun-0

9

Sep-0

9

Dec-0

9

Mar-10

Jun-1

0

Sep-1

0

Dec-1

0

Mar-11

Jun-1

1

Sep-1

1

Dec-1

1

Mar-12

Jun-1

2

Sep-1

2

Dec-1

2

Mar-13

(%)

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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 1,503 1,737 15.6 1.6 1.9 9.9 17.3 1.6 17.6FEDBK Neutral 454 - - 1.0 - 7.7 10.0 1.2 13.7

HDFCBK Neutral 689 - - 3.2 - 16.2 22.8 1.8 21.8

ICICIBK Accumulate 1,177 1,306 10.9 1.7 1.9 12.2 15.5 1.4 16.5

SIB Neutral 24 - - 0.9 - 5.3 11.4 1.0 17.1

YESBK Neutral 504 - - 2.1 - 10.5 14.9 1.3 22.1

ALLBK Accumulate 136 155 13.8 0.5 0.6 3.8 12.6 0.8 14.2

ANDHBK Neutral 93 - - 0.6 - 4.0 4.2 0.8 13.4

BOB Buy 706 815 15.5 0.7 0.9 4.9 17.0 1.0 16.0

BOI Accumulate 338 360 6.6 0.8 0.8 4.9 21.8 0.8 15.1

BOM Accumulate 50 56 11.2 0.6 0.6 3.8 14.8 0.6 15.6

CANBK Accumulate 439 461 5.1 0.7 0.8 5.1 14.0 0.8 14.1CENTBK Neutral 70 - - 0.6 - 3.9 42.8 0.6 13.3

CRPBK Buy 381 453 18.9 0.5 0.6 3.6 8.3 0.8 14.4

DENABK Accumulate 96 101 6.0 0.5 0.6 3.6 4.3 0.8 15.3

IDBI Accumulate 88 96 8.6 0.5 0.5 3.8 24.5 0.9 13.5

INDBK Buy 163 200 22.7 0.6 0.7 3.9 6.5 1.0 14.9

IOB Accumulate 68 78 15.0 0.4 0.5 3.3 53.3 0.7 13.1

J&KBK Neutral 1,292 - - 1.0 - 6.4 (5.2) 1.2 16.0

OBC Neutral 279 - - 0.6 - 4.4 17.5 0.8 13.1

PNB Accumulate 786 889 13.2 0.7 0.8 4.5 12.4 1.0 16.3

SBI Accumulate 2,331 2,567 10.1 1.3 1.4 8.3 16.4 1.0 17.0

SYNBK Accumulate 120 130 8.5 0.6 0.7 4.2 (3.5) 0.7 15.2

UCOBK Neutral 68 - - 0.7 - 4.7 36.9 0.6 12.6

UNBK Accumulate 243 264 8.7 0.7 0.8 5.1 21.2 0.8 15.3

UTDBK Accumulate 60 68 12.3 0.4 0.5 2.9 40.4 0.7 14.7

VIJAYA Neutral 52 - - 0.6 - 4.7 21.2 0.5 11.7

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 1,947 branches and 11,245 ATMs spread across 1,263

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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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 11,857 13,953- YoY Growth (%) 42.6 35.8 31.1 22.2 20.6 22.7 17.7Other Income 2,834 3,946 4,632 5,420 6,551 7,198 8,756- YoY Growth (%) 57.8 39.2 17.4 17.0 20.9 9.9 21.6

Operating Income 6,520 8,950 11,195 13,438 16,217 19,055 22,710- YoY Growth (%) 48.8 37.3 25.1 20.0 20.7 17.5 19.2

Operating Expenses 2,858 3,710 4,779 6,007 6,914 8,162 9,999- YoY Growth (%) 32.6 29.8 28.8 25.7 15.1 18.1 22.5

Pre - Provision Profit 3,662 5,241 6,416 7,431 9,303 10,893 12,711- YoY Growth (%) 64.5 43.1 22.4 15.8 25.2 17.1 16.7

Prov. & Cont. 877 1,389 1,280 1,143 1,750 1,631 1,914- YoY Growth (%) 51.3 58.5 (7.9) (10.7) 53.1 (6.8) 17.3

Profit Before Tax 2,785 3,851 5,136 6,288 7,553 9,262 10,797- YoY Growth (%) 69.2 38.3 33.3 22.4 20.1 22.6 16.6

Prov. for Taxation 970 1,337 1,747 2,046 2,373 3,148 3,670- as a % of PBT 34.8 34.7 34.0 32.5 31.4 34.0 34.0

PAT 1,815 2,515 3,388 4,242 5,179 6,114 7,127- YoY Growth (%) 69.5 38.5 34.8 25.2 22.1 18.0 16.6

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 37,367 42,890

Deposits 117,374 141,300 189,238 220,104 252,614 300,610 369,751

- Growth (%) 33.9 20.4 33.9 16.3 14.8 19.0 23.0

Borrowings 10,185 10,014 19,275 23,498 33,641 39,620 48,091

Tier 2 Capital 5,334 7,156 6,993 10,574 10,310 10,052 9,801

Other Liab. & Prov. 4,613 6,134 8,209 8,643 10,888 12,964 15,835

Total Liabilities 147,721 180,648 242,713 285,628 340,561 401,081 486,834Cash Balances 9,419 9,482 13,886 10,703 14,792 13,527 16,639

Bank Balances 5,598 5,722 7,522 3,231 5,643 6,646 8,067

Investments 46,330 55,975 71,992 93,192 113,738 131,566 155,714

Advances 81,557 104,341 142,408 169,760 196,966 238,329 293,144

- Growth (%) 36.7 27.9 36.5 19.2 16.0 21.0 23.0

Fixed Assets 1,073 1,222 2,273 2,259 2,356 2,691 3,168

Other Assets 3,744 3,906 4,632 6,483 7,067 8,322 10,102

Total Assets 147,721 180,648 242,713 285,628 340,561 401,081 486,834- Growth (%) 34.8 22.3 34.4 17.7 19.2 17.8 21.4

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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 3.2Cost to Income Ratio 43.8 41.4 42.7 44.7 42.6 42.8 44.0

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 17.6

B/S ratios (%)CASA Ratio 43.1 46.7 41.1 41.5 44.4 44.2 44.2

Credit/Deposit Ratio 69.5 73.8 75.3 77.1 78.0 79.3 79.3

CAR 13.7 15.8 12.7 13.7 15.2 14.3 13.2

- Tier I 9.3 11.2 9.4 9.4 11.6 11.3 10.7

Asset Quality (%)Gross NPAs 1.1 1.3 1.1 1.1 1.2 1.8 2.1

Net NPAs 0.4 0.4 0.3 0.3 0.4 0.4 0.5

Slippages 1.5 2.2 1.4 1.3 1.2 1.3 1.3

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

Provision Coverage 63.6 72.4 80.9 81.0 79.0 80.0 80.0

Per Share Data (`)EPS 50.6 62.1 82.5 102.7 110.7 130.7 152.3

ABVPS (75% cover.) 281.6 393.8 462.5 551.5 705.2 808.5 926.5

DPS 10.0 12.0 14.0 16.0 18.0 25.5 29.5

Valuation RatiosPER (x) 29.7 24.2 18.2 14.6 13.6 11.5 9.9

P/ABVPS (x) 5.3 3.8 3.3 2.7 2.1 1.9 1.6

Dividend Yield 0.7 0.8 0.9 1.1 1.2 1.7 2.0

DuPont AnalysisNII 2.9 3.0 3.1 3.0 3.1 3.2 3.1

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

Adj. NII 2.2 2.2 2.5 2.6 2.5 2.8 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 2.8 2.8 2.8

Other Inc. 2.0 2.0 2.0 2.0 1.9 1.9 1.9

Op. Inc. 4.4 4.6 4.7 4.7 4.6 4.7 4.7

Opex 2.2 2.3 2.3 2.3 2.2 2.2 2.3PBT 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 10.9

RoE 19.1 19.2 19.3 20.3 18.5 17.2 17.6

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Axis Bank 4Q FY 2013