Description
The documentation about Axis bank briefly discussing its history, income, revenue and other details in India.
BKFS Assignment 2
Axis Bank
Introduction : Axis Bank ltd. was established in 1994. It was the first new private sector bank to have began operations after GOI allowed new private banks to be established. As on June 2009 Axis bank has a network of more than 853 banks and 3723 ATMs. The bank today has a capitalization of INR 359.76 crores with a public holding of 57.79%. Axis Bank Limited provides a suite of corporate and retail banking products. The Company operates in four segments: Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Business. ? The Treasury segment includes investments in sovereign and corporate debt, equity and mutual funds, trading operations, derivative trading and foreign exchange operations on the account and for customers and central funding. ? The Retail Banking segment constitutes lending to individual/small business subject to the orientation, product and granularity criterion. Retail Banking activities also include liability products, card services, Internet banking and depository. ? The Corporate/Wholesale Banking includes corporate relationships not included under Retail Banking, corporate advisory services, placements and syndication, management of public issue, project appraisals, capital market related services and cash management services. Current Financial Situation: In Q1 FY 2009 Axis bank reported a 70% jump in quarterly net profits. Profits jumped from INR 330.14 crores in Q1 FY 2008 to INR 562.02 crores in Q1 FY 2009. Analysis of the quarterly results: Looking at the different sources of revenues, we notice that the quarterly interest income growth has been moderate at around 28%. Owing to the economic crisis the growth in has slowed down from over 50% till Q2 FY 2008 to 28% as of now. The main driver for the significant growth has been the increase in ‘other income’ which has jumped 53.42% to INR 958.57 crores. Other income growth was led by treasury profits at Rs3.26bn up 469% YoY and 96% QoQ driven by SLR, corporate bonds and equity gains. Trading profits also form a basic component of other income. The trading income has increased from INR 57.31 crores in the previous year to INR 326.07 crores this year. The bank has also recorded a gain of INR 5 crores from trading in forex derivatives.
Components of total income
2,985 2,545 2,266 3,039 2,906
625
694
732
846
959
Jun '08
Sep '08
Dec '08
Mar '09 Other Income
Jun '09
Sales Turnover
Axis bank plans to raise equity through GDR ( global depository receipts) worth INR 7.14 Crores. This will lead to a 10% dilution in equity. This may have a short term impact on the share prices of Axis bank, but this effect can’t be expected to last long.
Performance over the last 5 years: Key Financial ratios: Mar 2005 Profitability ratios PBDITA/Total Income PAT/Total Income Return on Net Worth(%) Liquidity ratios Quick ratio Current ratio Debt to equity ratio Interest cover Debt coverage ratios Credit Deposit Ratio Investment Deposit Ratio Cash Deposit Ratio Performance ratios P/E 13.38 13.05 11.71 11.87 12.34 47.4 41.9 13.72 52.79 49.85 8.18 59.85 48.96 7.17 65.94 41.39 8.17 68.89 39.04 8.16 5.34 5.42 1.06 1.41 1.64 1.68 1.55 1.4 3.09 3.13 2.56 1.33 3.96 3.97 1.03 1.37 4.11 4.11 1.52 1.37 77.59 14.13 18.19 75.17 13.4 18.28 74.92 12.04 19.37 70.6 12.15 12.21 73.29 13.14 17.77 Mar 2006 Mar 2007 Mar 2008 Mar 2009
Capital adequacy ratio Dividend Payout Ratio Net Profit
12.66 26.22
11.08 23.2
11.57 22.57
13.73 23.49
13.69 23.16
Looking at the profits over the years we can see that the bank has maintained stable margin despite decline in yield on assets. Axis bank has shown consistent growth in the total advances over the last few years. This has had a major impact on the asset structure of the company. The share of fixed assets and current assets has reduced and that of loans has increased over FY 2004 to FY 2009. With the robust growth in profits the company’s reserves and surpluses is increasing over the time period under consideration. Structure of asset & liabilities (%) Axis Bank Ltd. Rs. Crore (Non-Annualised) ASSETS Net fixed assets Current assets Loans & advances LIABILITIES Reserves & surplus Total borrowings Mar 2004 12 mths 1.8 27.16 38.77 Mar 2005 12 mths 1.37 17.35 41.28 Mar 2006 12 mths 1.14 10.54 44.82 Mar 2007 12 mths 0.92 11.8 50.3 Mar 2008 12 mths 0.84 13.66 54.42 Mar 2009 12 mths 0.73 12.39 55.2
3.75 4.83
5.68 6.8
5.24 8.98
4.26 11.86
7.67 8.26
6.67 10.5
The expenses structure of the company (the share of individual expenses as a % of total expenses) has remained nearly same over the last 5 years. Only a few expenses have shown sizeable shifts. ? ? Fixed assets have been reducing and hence the depreciation expenses have reduced from 3.3% in FY 2005 to 1.5% in FY 2009. The fund based financial service expense (interest paid) has increased from 54.8% in FY 2004 to 60% in FY 2009. The income structure of the company however shows major shifts over the past few years. Axis bank income has grown at a CAGR of 59% over FY 2004-09. However a few sectors have outdone these growth figures. ? The fee based financial services income has outdone the overall growth in income experienced by the company. This segment has grown at a CAGR of 86% over the same time frame.
? ?
The gain related to forex transactions has increased at a CAGR of 90% over the same time period. Some segments like income from treasury operations have shown minimal growth.
The change in income structure may hint at the change in banks strategy on income, but the bank maintains that is does not plan to deviate from the core business. The bank has maintained a capital adequacy ratio of over 13%. Under Basel 2 norms, RBI has set the minimum level for CAR at 9%. Axis bank’s CAR is much higher than this hence we can conclude that the bank has sufficient liquidity and it the danger of insolvency is less for Axis bank.
doc_782114099.docx
The documentation about Axis bank briefly discussing its history, income, revenue and other details in India.
BKFS Assignment 2
Axis Bank
Introduction : Axis Bank ltd. was established in 1994. It was the first new private sector bank to have began operations after GOI allowed new private banks to be established. As on June 2009 Axis bank has a network of more than 853 banks and 3723 ATMs. The bank today has a capitalization of INR 359.76 crores with a public holding of 57.79%. Axis Bank Limited provides a suite of corporate and retail banking products. The Company operates in four segments: Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Business. ? The Treasury segment includes investments in sovereign and corporate debt, equity and mutual funds, trading operations, derivative trading and foreign exchange operations on the account and for customers and central funding. ? The Retail Banking segment constitutes lending to individual/small business subject to the orientation, product and granularity criterion. Retail Banking activities also include liability products, card services, Internet banking and depository. ? The Corporate/Wholesale Banking includes corporate relationships not included under Retail Banking, corporate advisory services, placements and syndication, management of public issue, project appraisals, capital market related services and cash management services. Current Financial Situation: In Q1 FY 2009 Axis bank reported a 70% jump in quarterly net profits. Profits jumped from INR 330.14 crores in Q1 FY 2008 to INR 562.02 crores in Q1 FY 2009. Analysis of the quarterly results: Looking at the different sources of revenues, we notice that the quarterly interest income growth has been moderate at around 28%. Owing to the economic crisis the growth in has slowed down from over 50% till Q2 FY 2008 to 28% as of now. The main driver for the significant growth has been the increase in ‘other income’ which has jumped 53.42% to INR 958.57 crores. Other income growth was led by treasury profits at Rs3.26bn up 469% YoY and 96% QoQ driven by SLR, corporate bonds and equity gains. Trading profits also form a basic component of other income. The trading income has increased from INR 57.31 crores in the previous year to INR 326.07 crores this year. The bank has also recorded a gain of INR 5 crores from trading in forex derivatives.
Components of total income
2,985 2,545 2,266 3,039 2,906
625
694
732
846
959
Jun '08
Sep '08
Dec '08
Mar '09 Other Income
Jun '09
Sales Turnover
Axis bank plans to raise equity through GDR ( global depository receipts) worth INR 7.14 Crores. This will lead to a 10% dilution in equity. This may have a short term impact on the share prices of Axis bank, but this effect can’t be expected to last long.
Performance over the last 5 years: Key Financial ratios: Mar 2005 Profitability ratios PBDITA/Total Income PAT/Total Income Return on Net Worth(%) Liquidity ratios Quick ratio Current ratio Debt to equity ratio Interest cover Debt coverage ratios Credit Deposit Ratio Investment Deposit Ratio Cash Deposit Ratio Performance ratios P/E 13.38 13.05 11.71 11.87 12.34 47.4 41.9 13.72 52.79 49.85 8.18 59.85 48.96 7.17 65.94 41.39 8.17 68.89 39.04 8.16 5.34 5.42 1.06 1.41 1.64 1.68 1.55 1.4 3.09 3.13 2.56 1.33 3.96 3.97 1.03 1.37 4.11 4.11 1.52 1.37 77.59 14.13 18.19 75.17 13.4 18.28 74.92 12.04 19.37 70.6 12.15 12.21 73.29 13.14 17.77 Mar 2006 Mar 2007 Mar 2008 Mar 2009
Capital adequacy ratio Dividend Payout Ratio Net Profit
12.66 26.22
11.08 23.2
11.57 22.57
13.73 23.49
13.69 23.16
Looking at the profits over the years we can see that the bank has maintained stable margin despite decline in yield on assets. Axis bank has shown consistent growth in the total advances over the last few years. This has had a major impact on the asset structure of the company. The share of fixed assets and current assets has reduced and that of loans has increased over FY 2004 to FY 2009. With the robust growth in profits the company’s reserves and surpluses is increasing over the time period under consideration. Structure of asset & liabilities (%) Axis Bank Ltd. Rs. Crore (Non-Annualised) ASSETS Net fixed assets Current assets Loans & advances LIABILITIES Reserves & surplus Total borrowings Mar 2004 12 mths 1.8 27.16 38.77 Mar 2005 12 mths 1.37 17.35 41.28 Mar 2006 12 mths 1.14 10.54 44.82 Mar 2007 12 mths 0.92 11.8 50.3 Mar 2008 12 mths 0.84 13.66 54.42 Mar 2009 12 mths 0.73 12.39 55.2
3.75 4.83
5.68 6.8
5.24 8.98
4.26 11.86
7.67 8.26
6.67 10.5
The expenses structure of the company (the share of individual expenses as a % of total expenses) has remained nearly same over the last 5 years. Only a few expenses have shown sizeable shifts. ? ? Fixed assets have been reducing and hence the depreciation expenses have reduced from 3.3% in FY 2005 to 1.5% in FY 2009. The fund based financial service expense (interest paid) has increased from 54.8% in FY 2004 to 60% in FY 2009. The income structure of the company however shows major shifts over the past few years. Axis bank income has grown at a CAGR of 59% over FY 2004-09. However a few sectors have outdone these growth figures. ? The fee based financial services income has outdone the overall growth in income experienced by the company. This segment has grown at a CAGR of 86% over the same time frame.
? ?
The gain related to forex transactions has increased at a CAGR of 90% over the same time period. Some segments like income from treasury operations have shown minimal growth.
The change in income structure may hint at the change in banks strategy on income, but the bank maintains that is does not plan to deviate from the core business. The bank has maintained a capital adequacy ratio of over 13%. Under Basel 2 norms, RBI has set the minimum level for CAR at 9%. Axis bank’s CAR is much higher than this hence we can conclude that the bank has sufficient liquidity and it the danger of insolvency is less for Axis bank.
doc_782114099.docx