- Axis Bank aims to grow its mid-corporate loan book to Rs 1 lakh crore in 3-4 quarters
- The bank disbursed over Rs 5,000 crore under ECLGS 5.0 to mid-corporate and medium enterprises
- Mid-corporate portfolio has a 2% return on assets with negligible credit costs currently
Axis Bank plans to grow its mid-corporate funded loan book to Rs 1 lakh crore within the next three to four quarters, from about Rs 80,000 crore currently, as the private lender targets annual growth of 25%-30% in the business.
The bank has disbursed more than Rs 5,000 crore under the ECLGS 5.0 scheme to mid-corporate and medium enterprise customers. It is also expanding its presence in Tier-2 and Tier-3 cities, which account for nearly 30%-35% of the business.
The portfolio currently has a return on assets of close to 2%, while credit costs remain negligible, according to the bank.
Prashanth TS, group head of the Mid-Corporate & Medium Enterprises Group at Axis Bank, told NDTV Profit in an interaction that the business remains a key growth driver for the lender. "We aim to grow the funded book to Rs 1 lakh crore over the next three to four quarters," he said.
The bank has also seen average working capital utilisation rise to 60%-65% from 50%-55% as businesses require more liquidity. It is using AI-enabled tools for company analysis, monitoring and credit assessment, while continuing to focus on organic growth rather than acquisitions.
Here are the edited excerpts from the interview:
How big is Axis Bank's mid-corporate book? What is the growth guidance?
Axis Bank entered the mid-corporate segment after Amitabh Chaudhry took over as managing director and CEO in 2019. The business now has nearly Rs 80,000 crore in fund-based outstanding exposure and about Rs 18,000 crore in non-fund-based exposure.
"We aim to grow the funded book to Rs 1 lakh crore over the next three to four quarters." The segment is expected to remain a key growth driver. "Over the last six years, we have delivered consistent growth and expect to grow 25%-30% annually going forward."
How do you engage with clients amid competition from banks and non-banks?
The mid-corporate segment holds a strategic position within Axis Bank's wholesale banking business.
We support clients through lending, transaction banking, corporate salary solutions, NPS, Axis Capital, Axis Mutual Fund, Axis Securities, Axis Trustee and wealth management. The bank aims to meet clients' business and personal financial needs through a single relationship. Some customers could grow into large corporates or potential IPO candidates, allowing the bank to support them through different stages of growth.
Axis Bank also supports MSME clients through Invoicemart, a TReDS platform that has discounted more than Rs 3 lakh crore of invoices to date.
What are the return ratios and credit costs for this portfolio?
The portfolio has a return on assets of close to 2%, while credit costs remain negligible. Margins, underwriting discipline and asset quality support the bank's plans to grow the business.
How many loans has the bank disbursed under the ECLGS 5.0 scheme?
The conflict in West Asia has increased input cost pressures across sectors, although sales have remained broadly stable. Average utilisation of working capital limits has increased to around 60%-65% from 50%-55%, reflecting higher liquidity requirements.
Axis Bank has disbursed more than Rs 5,000 crore under ECLGS 5.0 to mid-corporate and medium enterprise customers.
"We have extended these facilities selectively to customers with genuine liquidity requirements and in line with prudent credit assessment standards."
The bank has made provisions for these exposures, while actual stress has remained limited.
Are there any inorganic growth plans?
At present, inorganic growth is not a strategic priority.
The bank sees sufficient opportunities within its existing franchise and expects its organic growth to support its plans.
Which locations do Axis Bank's mid-corporate clients predominantly come from?
The North, South and West contribute broadly similar shares to the business, Prashanth said. Nearly 30%-35% comes from non-Tier-1 cities.
From the beginning, our strategy has been to build a franchise across Tier-2 and Tier-3 markets, where we continue to see growth opportunities.
How are you using technology to scale the business?
Technology and AI are becoming more integral to the bank's operations, Prashanth said.
Our analysts already use AI-enabled tools to study company information, strengthen monitoring and improve credit evaluation.
Axis Bank is also working on tools to improve the assessment and processing of credit proposals while maintaining risk controls.
ALSO READ: $85 Crude Won't Derail India: Motilal Oswal's Ajay Khandelwal Sees 6.5% Growth, 1.5% CA
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.