Axis: Axis Bank says will consider capital raise post Citi deal


Axis Bank has put a lid on speculation that it may have to raise capital even as it expands its foot print in rural India and grows its medium and small scale enterprises lending. It would leverage its digital to gain access to deposits in smaller towns with a focus on Bharat Banking, the bank told analysts.

“The capital position remains self-sufficient to fund the future growth prospects and has built sufficient balance sheet buffers,” Amitabh Chaudhry, MD, Axis Bank told analysts. “The bank will assess the capital raise post the completion of Citi deal.”

Chaudhry added that the acquisition of Citi India’s consumer assets is progressing well and remains on track with potential for revenue and cost synergies.

“Post the completion of Citi deal, the quality of customers and talent pool of Citi would further add value to the liability franchise of the bank,” Chaudhry said.
Chaudhry added that the private lender remains focused on its GPS strategy with an aspiration to reach 18% consolidated RoE on a sustainable basis.

The bank is also ramping up Axis 2.0 – a fully digital bank with complete end-to- end digital solutions. The aim is to acquire customers at a faster pace and become a powerhouse of digital consumer lending.

The bank said it’s asset quality issues are behind, which will keep the slippages and credit cost under control. Net interest margins too have improved significantly and the bank believes that it has sufficient levers in place to offset the rise in deposit cost.

While the bank will continue to make investments, it expects core operating revenue to grow faster than operating expenses, and the bank is committed to bring down the cost-to-assets ratio to nearly 2% by the end of FY25.

“The GPS strategy was launched in January 2019 with a target RoE of 18%; the same was achieved with consolidated RoE standing at 18.9% in 2QFY23 and the company intends to sustain this going ahead,” Chaudhry told analysts.

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