Axis Bank’s CEO, Amitabh Chaudhry, reassured analysts that the bank doesn’t foresee an immediate need to raise more capital, even after the Reserve Bank of India’s directive to bolster capital buffers for personal loans. Chaudhry stated that the recent adjustments in risk weightage for certain loans would not significantly impact the bank’s capital adequacy ratio levels. This assurance comes amidst concerns regarding potential capital requirements due to regulatory changes.
Capital Adequacy and Growth Outlook
The bank’s senior management affirmed that its current capital levels are sufficient to sustain growth prospects for the upcoming year and safeguard the bank’s ratings. While acknowledging that loan growth might moderate in specific segments, Axis Bank remains confident in its ability to maintain adequate capital levels without immediate capital infusion.
Impact on Loan Portfolio and Business Strategy
Although the bank anticipates a marginal impact on certain unsecured loans following the risk weightage adjustments, it remains focused on sustaining growth through a diverse range of products and customer-centric experiences across India. Axis Bank aims to enhance risk-adjusted returns by concentrating on sustainable business practices and prudent investment strategies.
Strategic Focus on Deposit Growth
Axis Bank’s growth trajectory heavily relies on robust deposit accretion, outpacing industry peers by a significant margin. With a focus on profitability, the bank intends to align deposit pricing with its net interest margin (NIM) and return on equity (ROE) targets. The bank’s consistent efforts in deposit mobilization have contributed to its market share in incremental deposits.
Outlook for Unsecured Lending and Net Interest Margin
In the unsecured lending segment, Axis Bank emphasizes serving existing customers to propel advances growth while avoiding low-ticket loans. Despite sector-wide growth projections of 12-14% in FY25, the bank aims to surpass this rate. It expects its net interest margin to stabilize at 3.8% consistently, reflecting its strategic focus on profitability and prudent risk management.
Axis Bank’s proactive approach to capital management, coupled with its strategic focus on sustainable growth and profitability, underscores its resilience and long-term viability in the dynamic banking landscape.
