Aiming at Balanced Growth

November 2011

Contents
Key Macro Trends

Business Model

Financial Snapshot

Contents
Key Macro Trends

Business Model

Financial Snapshot

India Opportunity
High Savings rate Favourable demographics

Robust GDP growth

GDP
60000

Underpenetrated banking sector

12%

% Growth 10%
8% 6% 4% 2% 0%

50000
( Rs in billion) 40000 30000 20000 10000 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Source: IMF, RBI, Govt of India

Key Opportunities for Banking Sector

Rapid urbanisation
290 220
750 590
100% 80%

6000 5000 ( Rs in billion) 4000 3000 2000 1000 0

Private Investment in Infrastructure (Twelfth Plan)

Public Private

340

60%

636
1991

815

880

40% 20%

2001

2008

2030

0%

Rural population (mn) Urban GDP share (%) (RHS)

Urban population (mn)

2012-13

2013-14

2014-15

2015-16

2016-17

Growing prosperity
Distribution of households (mn) by income categories
HH income (Rs 000 per annum)

Transformation of payments landscape

290 CAGR (%) 18 20 50 120 16% 13% 9% 5%

> 1000 500 1000 200 500 90 200

221 4 6 22 75

114 2010 (E)

82 2020 (F)

3%

Source: Planning Commission , NCAER, Indian Urbanization Econometric Model; Indian Banking 2020, Report by BCG in association with FICCI and IBA, Analyst and sector reports

Contents
Key Macro Trends

Business Model

Financial Snapshot

Evolution of Axis Banks Business Model

Phase 3: FY 10 onward Predictable, consistent profitable growth Reduced risk concentration Increase share of customer wallet Improve operating leverage Above industry growth

Phase 1: upto FY 03 Corporate lender Corporate deposits Slow growth Particulars

Phase 2: FY 04 09 Developed CASA franchise Fee income diversity in revenue Period of very high growth in business and network

FY03 19,613 23% 192

FY 09 147,722 43% 1,815

FY 11 242,713 41% 3,388

6

Balance sheet size (` crore) CASA as % of total deposits PAT (` crore)

Axis Bank Overview

Snapshot for the period ended 30th September 2011 Total Assets (1) Net Loans (1) Total Deposits (1) Net Worth as on 30.09.2011(1) ROE ROA Saving bank accounts Branches and Extension Counters Foreign Offices ATMs `2,506.11 billion (US$ 51.17 billion) `1,400.89 billion (US$ 28.60 billion) `1,944.55 billion (US$ 39.70 billion) `200.74 billion (US$ 4.10 billion) 19.47% 1.57% 10.64 million 1,446 6 7,594

Business Mix H1 FY12 (%)

Loans

Deposits

24
58 18

SA CA

Term

(1) Conversion Rate 1 USD = ` 48.975(As on 30.9. 2011)

Business Strategy Along Four Key Themes

Leveraging Domestic Growth Opportunities

Continue to build and strengthen Retail Banking franchise

Leverage strengths in Corporate Banking & Infrastructure linked Financial services

Build a full-service offering to SME customers

Capture end-to-end opportunities in Payments across customer segments

Multi-channel Presence Pan-India

Integrated channel strategy No. of branches & Extension counters Customer convenience and cost effective customer delivery Advanced use of technology

Rural

Semi-urban

Urban

Metro

116

121 470

64
Branches

448

44 22 137 186 314 248

255
450

457

Call centre

ATMs

377 287
376 390

263 222

Customer touch points

Point of Sale
Mobile Banking

Mar'08 Mar'09 Mar'10 Mar'11 Sep'11

Particulars Branches + Extn counters Mar08 644 Mar09 792 Mar10 983 Mar11 1,390 Sep11 1,438

Internet Banking
Traditional channels Alternate channels

ATMs
Centers Covered

2,764
405

3,595
515

4,293
643

6,270
921

7,594
953

1.CAGR for period from March 2008 to March 2011

Full Suite Of Products To Leverage Retail Liabilities Franchise

Channels
Utility Bill, School Fee Payments ECS Mandates & NEFT/RTGS Spends through cards Online Tax Payments IPOSmart

Payment Solutions

Branch
Door to all Banking and Financial services for the customer

ATM

Cards

Debit Cards Credit Cards Prepaid Cards Travel Currency & Gift Cards

Savings Account
Can also be through Home Loan, Standalone FDs, Mutual Funds, etc.

Mobile
Internet Phone Investment Products
Fixed Deposits Demat / Online Trading Mutual Funds Life Insurance General Insurance Gold Coins

Loans

Home Loans Auto Loans Personal & Other Loans

10

Recognition for High Quality Customer Service

Hindustan Times MARS Banking Satisfaction study 2010

This independent survey covered 18 Cities and 9,486 bank account holders across India

11

Healthy Net Interest Margins and Robust NII Growth

Net Interest Margin (%)

Net Interest Income (` Crore)

12

Corporate Bank : Originate and Distribute Model

End to End Infrastructure Player
Investment Banking Non-Bank Units Business Banking
Retail 20%

Corporate Banking: A key driver of overall bank performance

Agri & Others 12% Corp Bank 53%

Credit

Syndication

Treasury

Debt Private Placement League Table

Loan syndication market share (%)

Institution Axis Bank ICICI Bank I-Sec Primary Citi KMCC

Source: Bloomberg

Rank (CY11 YTD)

1

Rank (CY10) 1

Rank (CY09) 1

SME 15%

CB share (%) in aggregate loans FY11

2
3 4 5

2
5 12 11

10
4 9 8
CB share (%) in fees
Source: Research Reports, Company Results

13

Full-service offering to SME customers

Lending
Diversified portfolio across 3 segments: Medium Enterprises Group, Small Enterprises Group and Supply Chain Finance Driven through 32 SME centres, with dedicated teams for sales and credit SME franchise

Other offerings
Commercial banking products - Current accounts, forex, trade services Retail banking solutions - Salary account products, Wealth & Priority Banking services, Insurance

Risk management
- Qualitative Credit Assessment in addition to rating - Exit/Watch list category - Collection managers

Advisory services
- Financial advisory, private equity, M&A and capital market solutions

Growth in SME Loan portfolio and customer base

CAGR = 25%

CAGR = 23%

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Credit Profile
Rating distribution of Large and Mid-corporate Loans1 (%)
AAA AA A BBB <BBB or unrated

Proportion of secured loans

5 22

10 18 47 22

7 25 43 3 23

7 24

22

83.8%
58

86.6%

84.5%

81.7%

54 16 3

42

15

24 2
Sep'11

Mar'08 Mar'09 Mar'10 Mar'11 Rating distribution of SME loans1 (%)

SME 1 SME 2 SME 3 SME 4

SME 5-8

1 9

1 12

2 13

5
18

5 18 56

62

64

62

59 11 7 Mar'11

Mar'08
19 9 Mar'08 15 8 Mar'09 13 10 Mar'10 13 8 Sep'11

Mar'09

Mar'10

Mar'11

15

As per internal ratings

15

Payments Solutions Across Government, Corporate and Business Segments

Leading player in Electronic Benefit Transfer (EBT) through Smart Cards under IT Enabled FI Model Continue to
capture end to end payment Amongst select set of Indian banks offering host-tohost transactional banking facility Amongst leading Banks in electronic payments Leading Bank in G2B e-Governance initiatives

opportunities
across different customer

segments

Leading bank in Merchant Acquiring Business with installed base of ~1.90 lacs EDC Machines
Synergies with current account franchise

16

Impact of Recent Regulatory Changes

Continue to differentiate on strong distribution, brand,

Deregulation of SB interest rates

customer service and product offering

Remain focused on customer acquisition, deepening and cross-sell

Branch licensing

Cluster approach for opening branches in Tier V and VI centres

Dovetail into Financial Inclusion Plan and agriculture

lending strategy

Note: Savings Bank deposits constitute ~25% of daily average deposits

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Contents
Key Macro Trends

Business Model

Financial Snapshot

18

Stable Deposit Base

CASA and Retail term deposits (` crore)
Retail T erm Dep osits

Composition of deposits
As on Mar07 CASA Deposits 40% 46% 43% CASA + Retail Term Deposits* 57% 64% 63%

Savings accoun ts deposits Current accounts deposits

1,22,738 1,11,224

92,878
33,457

40,698

Mar08 Mar09

74,523
26,848

56,074 33,746
10,316
12,126 20,045

23,879

40,850 16,047 25,822

19,982 32,168 36,917

46,786

33,862

Mar10 Mar11
35,354

47% 41%
42%

66% 59%
63%

24,822

11,304

Sep11
Mar '09 Mar '10 Mar '11 Sep '11

Mar '07

Mar '08

*Retail Term Deposits are defined as term deposits up to ` 5 crore

1 . CAGR (between Mar07-Mar11)

19

Margins Driven by Low Cost Deposits

Cost of funds (%) Net Interest Margin (%)

Current and savings accounts deposits (` bn.)

Savings account deposits Current account deposits

Low cost deposits ratio1

778 660 506

400

20

Defined as the ratio of Current and Savings bank deposits to Total deposits 2 CAGR is based on data of fiscal 2007 to 2011

20

Diversified Fee Income Franchise

Fee income (` bn) Fee profile (FY11)

Fee Income as % of Operating Revenue 35.9% 34.1% 37.2% 32.7% 33.9%

1 CAGR is based on data of Fiscal 2006 to 2011 Note: Previous years figures have been restated where required

21

Industry-wise Distribution
Outstanding as on 30 Sept 2011 (%) Rank 1. Sectors Total 10.58 9.23 9.23 6.53 6.24 4.41 3.50 2.99 Fund-based 10.66 5.05 7.08 3.34 5.76 3.80 4.16 1.53 Non-fund based 10.44 16.62 13.02 12.15 7.10 5.47 2.34 5.57

Financial Companies** Power Generation & Distribution Infrastructure* Engineering & Electronics Metal & Metal Products Trade Food Processing Petrochemical & Petrochemical Products

2.
3. 4. 5. 6. 7. 8. 9.

Chemical & Chemical Products

Real Estate

2.67
2.46

1.86
3.66

4.12
0.34

10.

& Percentages stated above are on the total fund and non-fund based outstanding across all loan segments * Financing of projects (roads, ports, airports etc) ** Includes Housing Finance Companies and other NBFCs

22

Asset Quality
Gross NPAs Net NPAs Net NPA (%)

Amount ` in Crore

Net NPA as at year-end

1,800 1,600 1,400 1,362 1,200 1,000 800 0.34% 600 400 200 409 1,599 1,573

1,744

0.90%

FY07 FY08 FY09 FY10 FY11

0.61% 0.36% 0.35% 0.36% 0.26%

1,483

0.75%

0.60%
Cumulative Restructured Assets: `2,410

0.45% 0.34% 0.29%

0.26% 0.31% 0.30% 410 462 549 0.15%

crore (1.49% of gross customer assets) as on 30th September 2011 Additions during Q2FY12: `312 crore

386

Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12

23

Capital Strength
Capital Adequacy Ratio (%)

Total CAR and Tier-I CAR as on 30th Sept 2011 would have been higher by 85bp were H1 profits to be accounted for

24

24

Superior Track Record of Growth and Profitability

Source : Company annual reports Top 10 sample is based on ranking of banks by FY11 asset base

25

Summary
Combining growth & profitability Gained market share and maintained above industry profitability

Diversified revenue streams

Strong retail deposit franchise Robust asset quality

Aiming for balanced growth Continue to build on key strengths of the franchise

Leverage customer relationships with a complete product portfolio

Pursue growth opportunities in key businesses

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Safe Harbor
Except for the historical information contained herein, statements in this release which contain words or phrases such as will, aim, will likely result, would, believe, may, expect, will continue, anticipate, estimate, intend, plan, contemplate, seek to, future, objective, goal, strategy,

philosophy, project, should, will pursue and similar expressions or variations of such
expressions may constitute "forward-looking statements". These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from

those suggested by the forward-looking statements. These risks and uncertainties include, but are not
limited to our ability to successfully implement our strategy, future levels of non-performing loans, our growth and expansion, the adequacy of our allowance for credit losses, our provisioning policies,

technological changes, investment income, cash flow projections, our exposure to market risks as well
as other risks. Axis Bank Limited undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.

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