Axis Bank expects to complete the acquisition of Citibank’s consumer business in India by the fourth quarter of the current financial year, managing director and chief executive officer Amitabh Chaudhry said.

The bank is awaiting approval from the Competition Commission of India (CCI) and expects it to come over the next six to eight weeks. An extensive engagement with Citi can only happen after the CCI approval.

The bank is, however, working on integrating people, technology and business operations with Citi, Chaudhry said at a media call after the quarterly results.

Axis Bank had agreed in March to buy Citibank’s consumer portfolio in India for Rs 12,325 crore in cash, while paying another Rs 1,200 crore to aid the transition.

The purchase included Citi’s credit cards, retail banking, wealth management and consumer loans.

Axis Bank had then said that the deal would add 2.5 million cards to the lender’s portfolio, increasing its credit-card customer base by around 31%.

For the quarter ended June, the bank has issued 9.9 lakh credit cards.

Lending activity

On the lending side, intense competition among banks for corporate loans has led to Axis Bank being selective as it seeks to protect the pricing. The private sector lender reported a 5% year-on-year contraction in net corporate loans to Rs 2.16 trillion for the fiscal first quarter ended June 2022.

The competitive intensity among banks on the corporate loan side has led to some amount of mispricing of liquidity, said Axis Bank deputy managing director Rajiv Anand.

Corporate advances accounted for 31% of the bank’s total loan book as on 30 June. For Axis Bank, loans to small and medium enterprises and retail borrowers respectively grew 27% and 25% YoY. 

"It is not as if we are not doing business with large corporates. On the lending side, particularly at the short end of the curve, we think that the competition to some degree is mis-pricing liquidity, not risk, at this point in time," said Anand.

The private sector lender’s net advances grew 14% YoY to Rs 7.01 trillion while deposits rose 13% to Rs 8.03 trillion as on 30 June. 

Profit

Axis Bank posted a 91% YoY rise in standalone net profit of Rs 4,125 crore for the quarter ended 30 June 2022.

The bank's operating profit, though, fell 5% YoY due to a 34% rise in  operating expenses and treasury losses. 

Core operating profit grew 17% YoY and 5% quarter-on-quarter.

Net interest income

Net interest income (NII), the difference between interest earned and interest expended, grew 21% YoY to Rs 9,384 crore. 

Net interest margin (NIM) expanded 14 basis points YoY to 3.60% in the June quarter. Sequentially, it was up 11 basis points.

Fee income rose 34% YoY to Rs 3,576 crore. Retail fees rose 43% YoY and constituted 66% of the bank’s total fee income. 

Asset quality

Gross NPA stood at 2.76% of the bank's loan book, down from 2.82% in the March quarter and 3.85% in the year-ago quarter. 

Net NPA stood at 0.64%.

Gross slippages were at Rs 3,684 crore, down from Rs 3,981 crore in the March quarter and Rs 6,518 crore in the year-ago quarter.

Provisions

Axis Bank said it made specific loan loss provisions worth Rs 777 crore compared to Rs 602 crore in the March quarter and Rs 2,865 crore in the year-earlier quarter.

Cumulative provisions stood at Rs 11,830 crore while credit cost for the quarter was at 0.41%, declining by 129 bps on year. "It is pertinent to note that this is over and above the NPA provisioning included in our PCR calculations. These cumulative provisions translate to a standard asset coverage of 1.70% as on 30 June 2022. On an aggregated basis, our provision coverage ratio (PCR) stands at 134% of gross NPA," the bank said.

Treasury

The bank reported treasury loss of  Rs 667 crore as bond yields climbed through the quarter.