Axis Bank to List Two More Group Companies

Axis Bank: Medium-Term Growth Prospects Remain Strong

Axis Bank's Managing Director and Chief Executive Amitabh Chaudhary remains optimistic about the bank's medium-term growth prospects, despite near-term caution due to the ongoing war.

Key Developments:

• The bank plans to list Axis Finance in the next couple of years and reverse merge Axis Max Life Insurance with Max Financial, expanding its presence in the financial sector.
• The Reserve Bank of India's (RBI) allowance for banks to fund mergers and acquisitions (M&A) has prompted Axis Bank to form an M&A group and actively pursue transactions.
• The bank's strong deposit growth, with a 14% increase in Q3, and loan growth, with a 15% increase, have made it a preferred choice among brokerages.

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Near-Term Concerns:

• Chaudhary is cautious about loan growth in the near term, citing potential slowdown due to war-related factors.
• He believes that operational and raw material expenses may increase, leading to a spurt in loan growth.
• Stress in loans is not a concern, as Axis Bank's macro balances are in strong shape.

Medium-Term Focus:

• Chaudhary's primary concern is the cost of deposits and its impact on margins.
• The bank's net interest margin guidance of 3.8% remains unchanged, despite a 3.64% margin in Q3.
• The growing dearth of deposits calls for more action, with Chaudhary advocating for the acceptance of wholesale deposits as a reasonable share of a bank's deposit franchise.

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Regulatory Support:

• Chaudhary suggests that the regulator consider guidelines allowing three-year CDs to address concerns about high loan-deposit ratios.
• He believes that wholesale deposits should not be seen as a negative and that the ecosystem needs to accept the shift towards more wholesale deposits.

Associate Activities:

• Axis Bank is making progress on its associate activities, with Axis Finance performing well and attracting interested buyers.
• The bank plans to list Axis Finance in two to two and a half years, ahead of the RBI's three-year deadline.
• Axis Bank also plans to seek permission from IRDA to reverse merge Axis Max Life Insurance with Max Financial and list the company.