Axis Bank Limited (532215) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Axis Bank conference call to discuss the Q4 FY '23 financial results. Participation in this conference call is by invitation only. Axis Bank reserves the right to block access to any person to whom an invitation has not been set. Unauthorized dissemination of the contents or the proceedings of the call is strictly prohibited, and prior explicit permission and written approval of Axis Bank is imperative. [Operator Instructions] Please note that this conference is being recorded. On behalf of Axis Bank, I once again welcome all the participants to the conference call. On the call, we have Mr. Amitabh Chaudhry, MD and CEO; and Mr. Puneet Sharma, CFO. I now hand the conference over to Mr. Amitabh Chaudhry. Thank you, and over to you, sir.

Thank you, Neerav. Good evening, and welcome, everyone. We have on the call, Rajiv Anand, Deputy MD; Puneet Sharma, CFO; and other members of the leadership team. We, Axis Bank, have had a solid year of performance, built on our GPS strategy, with meaningful upward shift in trajectory on key business parameters every quarter. More importantly, the investments in building blocks that we have made in this period on customer experience, digital capabilities,and people give us the confidence in sustaining this performance. We delivered strong growth across our focus segments, completed successful acquisition of Citi and retained our leadership position in specific businesses like credit cards, wealth management and digital. This has been possible through the collective efforts of our employees and partners, who serve the needs and aspirations of our customers. We are carrying the confidence and momentum of having check the boxes on growth, profitability and sustainability over the past year into financial year '24. We continue to stay on course on 3 core areas of execution of our GPS strategy, namely, starting the first one, embedding the performance-driven culture. In the performance-driven culture, it was important for us to improve the profitability metrics. During the quarter, we completed the acquisition of Citibank India Consumer Business, a landmark in the Indian banking industry. This was a large and complex transaction, including cards, wealth, deposits and assets businesses, which we have completed in an accelerated timeline within 7 months after the CCI's approval. To that effect, we have taken nonrecurring onetime charges reported as exceptional items, details of which would be provided by Puneet subsequently. Our consolidated annualized ROE, excluding exceptional items, for quarter 4 financial year '23 stood at 21.58%, up 500 basis points year-on-year and 177 basis points quarter-on-quarter. We also delivered our aspirational consolidated ROE, again excluding essential items, of 18.84% on a full-year basis. Let me highlight the key trends for quarter 4. Net interest income grew by 33% year-on-year and 2% quarter-on-quarter. Net interest margins improved 73 basis points earlier. Core operating profit grew by 46% year-on-year and 3% quarter-on-quarter. Profit after tax, excluding essential items, stood at INR 6,625 crores, which was up 61% year-on-year and 13% quarter-on-quarter. Point number two, we listed the growth trajectory and consistently gained market share. On deposits and advances, the domestic loan book grew by 23% year-on-year and 13% quarter-on-quarter, and deposits grew by 15% year-on-year and 12% quarter-on-quarter, with CASA ratio at 47%, up 215 basis points year-on-year and 261 basis points quarter-on-quarter, respectively. And retail term deposits up by 5% quarter-on-quarter. We continue to grow faster than the industry. The foundation we have built on customer centricity, rigor and rhythm to improve in these core business areas has meant a smooth upward growth trend that, we feel confident, will sustain. In credit cards, we were among the largest issuer on net basis. Our card issuances for quarter 4 financial year '23 stood at new quarterly highs of 1.13 million, taking the full-year financial year '23 card issuances to 4.2 million, up 8% year-on-year. We gained significant incremental market share of 26% in financial '23 on merchant acquiring business. We launched Digital Dukaan, a comprehensive digital offering for the merchant community. We are now ranked #2 in NEFT volumes market share, which is up from 4th. Customer acquisition and deposit quality. Our customer acquisition remains strong. In quarter 4, we added 3 million new customer accounts, a growth of 23% year-on-year and 3% quarter-on-quarter, taking the total number of accounts opened in financial year '23 to new highs of 10.8 million, up 26% year-on-year. We have strengthened our corporate salary proposition significantly. We saw 33% year-on-year growth in new salary labels acquired and 2% year-on-year growth in salary account acquisitions in financial year '23. Our premiumization strategy and the recent acquisition of the Citi portfolio has resulted in 870 basis points increase in share of premium segment in the retail savings portfolio. Deposit quality has improved with outflow rates lower by 550 basis points on a year-on-year basis. And obviously, this is a result of a lot of hard work we have done in this area. We have also seen all-round growth across businesses and market-leading growth in our focus segments. Retail disbursement stood at new lifetime highs for the quarter and the fiscal year as a whole. Retail loans grew 22% year-on-year and 14% quarter-on-quarter. The Bharat loan portfolio grew by 26% year-on-year and 19% quarter-on-quarter, respectively. Unsecured personal loans and credit card advances grew faster at 21% year-on-year and 97% year-on-year, respectively. MSME segment continues to remain a key growth driver for the bank. The Mid-Corporate book grew 38% year-on-year and 10% quarter-on-quarter. The combined portfolio of mid-corporate SMEs and small businesses grew 32% year-on-year and now constitute 20% of the loan book, up 629 basis points in the last 3 years. Domestic corporate loans grew 22% -- 24% year-on-year, 11% quarter-on-quarter. We have seen a healthy pickup in demand for corporate loans. Demand is seen across capital structure. And as One Axis, we are serving them through our range of products, working capital and term loans, bonds and equity. Importantly, this growth has come without any dilution of our risk guardrails. We have a reasonably good pipeline of transactions and are confident that the momentum will continue into financial year '24. The third pillar in the -- ensuring that the improvement of the -- sorry -- and performance-driven culture was fostering a winning mindset. We are doing more, and this is reflected in multiple external recognitions we received this quarter. And Neo, possibly the most wholesale digital banking platform in India, continues to receive positive reviews from clients. During the quarter, the bank won the Best BFSI Customer Experience award for Neo API Banking Suite and the Best BFSI MSME Support award for Neo Connect at the prestigious Dun & Bradstreet BFSI & Fintech Summit 2023. Project Neo also won the ET BFSI Excellence award for Customer Engagement Initiative of the year. We were ranked in the Top 10 of the Kincentric Best Employers in India survey, and we were certified a Great Place to Work for in a second consecutive year. Business Today has recognized us as the Top 7 Best Companies to work for, owing to our employee-friendly policies. These accolades demonstrate the impact of investment we have made in people and reflect the positive cultural change in the bank, which we have seen over the last couple of years. The second pillar for us is strengthening the core. Our balance sheet is strong with self-sustaining capital structure. Balance sheet is resilient with our asset quality now amongst the best-in-class with net NPA of 0.39%, high coverage of 81% and standard asset coverage of 1.42%. We have net accreted CET1 capital, excluding the impact of exceptional items, of 69 basis points in financial year '23. We are building the next-generation technology architecture for wholesale digital banking. I have spoken a bit about Neo already. Let me give some color on it. The outcomes in financial year '23 demonstrated a strong product market fit with our API-led cash management and trade proposition finding good acceptance. Over 200 corporate clients are now experiencing the technology-driven working capital optimization benefits from Neo. Business outcomes have seen 3x growth in transactions along with 2x growth in throughput over last year. During -- in financial year '24, we have a strong pipeline of demand for Neo from our customers. We expect significant uptick in adoption and subsequent monetization of this platform. We have built the #1 rated consumer banking digital app in the world. Simply put, with Neo, we aspire to replicate that success in wholesale bank. We're also building for the future. Our digital banking performance continues to be strong. I have spoken about the next wave of digital capabilities that we are building in Axis 2.0. This is fully functional with over 20 products across liabilities, loans, investment products, insurance and ForEx accounting for up to 5% to 85% of incremental sales for these products. If you take a view of Axis 2.0 balance sheet during the year, we grew CASA balances by 92% year-on-year, retail TD inflows by 89% year-on-year and retail loans up by 53% year-over-year. We have scaled our account aggregator linked business significantly through the year, and we also launched our Central Bank Digital Currency offering. We continue to enter strategic partnerships to expand our presence in the digital space. Our bank-wide programs to build the distinctiveness, continue to gain strength on strength. Bharat Banking engine is humming with disbursement growing by 37%, booked by 26% and deposits by 15% in financial year '23. The distribution footprint has been expanded to 2,137 in Bharat Banking branches, complemented by the 60,000-plus CSC VLE agents across the country. We have launched several new initiatives to strengthen our proposition in these markets. Our digital co-lending platform has gone live, with 5 more partners joining in. It will provide access to new customer segments and augment the PSL portfolio. We have launched an eKYC-based CASA platform, enabling deepening of our liability products through partnership ecosystem. Sparsh, our customer obsession program, is making an impact on our customer experience scores. We started the Sparsh build-out from branches and wealth management segment of Burgundy. And in the last 12 months, Sparsh has taken to all our service touch points, all products payments and segments in liabilities, cards and payments and to the commercial banking group. This is a multiyear journey, and we will continue to invest here with the aim to cover the entire bank in this financial year. Our subsidiaries continue to create significant value. The One Axis approach continued to reflect the robust performance of our subsidiaries. The total financial year '23 PAT of our domestic subsidiaries stood at INR 1,304 crores. Having scaled up the business significantly in the last 4 years, we realigned and strengthened the leadership teams across our capital markets, facing subsidiaries during the quarter to drive our next phase of growth. On Citibank Consumer business integration, we closed the transaction on 1st March 2023 in a smooth transition of business without any service disruption for customers. Early traction for Citibank customer base has been quite positive, and that is reflected through deposits from this customer set, growing by 4% since 31st Jan 2023. In the past 2 months, the senior management of the bank has engaged directly with several high-value customers, who have acknowledged the seamless transition, continuation of highest levels of service and access to Axis Bank's extensive network of branches and wide product portfolio under the One Axis umbrella. All the 1,600 corporates for Suvidha salary accounts have been contacted and set up in our systems. We are activating them for additional locations of Axis, where Citi was hitherto not present. We have already started incremental onboarding on Axis Bank platform. There is strong interest from the erstwhile Citi Suvidha corporates for our comprehensive product suite. All the Citi employees are now integrated into the Axis' organization structure. They are excited to be part of the large Axis franchise and are looking forward to building new careers in a fast-growing platform. The business teams have started implementation of 20-plus synergy initiatives in this quarter itself, identified across business units as we look to drive revenue and cost benefits. In closing, in the last 3 years, we have strengthened our balance sheet and listed the key operating metrics significantly. We are well positioned to take advantage of the trends that are emerging in India: the China Plus One, MSME opportunity, the next-gen public digital infrastructure like Account Aggregator, OCEN and ONDC; and Bharat being an engine of growth for India. We at Axis Bank remain confident on the growth opportunities in the Indian economy. We remain watchful over consumer demand and the global macros. But we feel confident that our franchise will grow at 400 to 600 basis points faster than the industry in the medium to long term. We are working hard in building an all-weather institution that will stand the test of time. I'll now request Puneet to take over.

Thank you, Amitabh. Good evening, and thank you for joining us. We continue to make good progress on our endeavor to be a stronger, consistent and sustainable franchise. We delivered above our aspirational ROE of 18%, excluding exceptional items on a full year FY '23 basis. We remain focused on strengthening our core businesses and ensuring our balance sheet is resilient across cycles. Amitabh has discussed the business and transformation projects. I will cover the salient features of the financial performance of the bank for FY '23 and Q4 FY '23, focusing on our operating performance, capital and liquidity position, growth across our deposit and loan franchise, asset quality, restructuring and positioning. The bank is the legal owner of Citibank India Consumer Business effective March 1, 2023. Hence, our reported numbers for FY '23 and Q4 FY '23 are not strictly comparable with the reflected prior period. Charged to the P&L aggregating INR 12,490 crores, emanating from prudent accounting choices comprise, one, full amortization of intangibles and goodwill, which is equal to the purchase consideration paid/payable on the acquisition of Citibank India Consumer Business. Number two, the impact of policy harmonization on operating expenses and provisions. And number three, the stamp duty on acquisitions. These are nonrecurring and onetime and have been charged to the P&L in Q4 FY '23 and reported as exceptional items. Details are provided by way of Note 5 to the published AFR. I would also request you to please refer to Slide 19 of the investor presentation, which provides a comparative analysis of key performance parameters as reported with and without exceptional items. Additionally, Slide 89 of the investor presentation provides annual and sequential growth rates with and without Citibank India Consumer Business for advances and deposits. In FY '23, our operating performance was strong across NIMs, fee, cost and credit line. For full FY '23, on a reported basis, NIM stands at 4.02%, improving 55 basis points Y-o-Y; NII stands at INR 42,946 crores or Y-o-Y growth of 30%; fee stands at INR 16,216 crores, Y-o-Y growth of 25%, granular fee at 93% of total fee. Core operating performance stands at INR 32,291 crores, Y-o-Y growth was 40%. Cost to assets at 2.25%, increasing 8 basis points Y-o-Y. Cost to income, excluding exceptional items, stands at 46.1%, improving 274 basis points Y-o-Y. Credit cost at 40 basis points declined 32 basis points Y-o-Y. PAT, excluding exceptional items, is INR 21,933 crores, increasing 68% Y-o-Y. Net NPA at March '23 was 0.39%, declining 34 basis points Y-o-Y. Gross NPA at March '23 was 2.02%, declining 80 basis points Y-o-Y. PCR stands at 81%, improving 613 basis points Y-o-Y. Our standard assets cover, which is all non-NPA provisions per standard assets, stands at 1.42%. All provisions standard on standard others by GNPA gives us a ratio of 145%, improving 13.29% on a Y-o-Y basis. Consolidated ROA, excluding exceptional items, at 1.82% improving 53 basis points Y-o-Y. Consolidated ROE, 18.84%, above our aspirational ROE, improving 517 basis points Y-o-Y. The CET accretion, net of organic consumption, but excluding exceptional items, was 69 basis points. For Q4 FY '23, our reported -- on a reported basis, NII stood at INR 11,742 crores, growing 33% Y-o-Y, 2% Q-on-Q. NIM for Q4 FY '23 stood at 4.22%, growing 73 basis points Y-o-Y. NIM for the quarter was adversely impacted by 6 basis points as the bank maintained 13% higher average LCR in the current quarter as compared to the previous quarter and the same quarter previous year. Reported NII and NIMs for the quarter also include interest on income tax refund, aggregating INR 85 crores, contributing 3 basis points to the net interest margin. The previous quarter included a onetime interest recovery on restructuring of an existing NPA accounts, aggregating INR 149 crores, contributing 5 basis points to the previous quarter NIMs. As previously indicated, we saw an increase in deposit costs in Q4 FY '23, and we expect deposit costs to increase further in Q1 FY '24. We have a cushion of approximately 40 basis points over our guided structural NIMs through cycle, and our endeavor will be to retain as much as possible of the said cushion. We had clearly articulated the drivers of our NIM improvement journey. The progress against the key drivers in this quarter are as follows: improvement in balance sheet mix. Loans and investments comprised 86% of total assets at March '23, improving 242 basis points Y-o-Y. INR-denominated loans comprised 95% of total advances at March '23, improving 340 basis points Y-o-Y. Retail and CBG advances comprised 69% of total advances at March '23, improving 150 basis points Y-o-Y. Low-yielding RIDF bonds responds declined by INR 11,089 crores Y-o-Y. RIDF comprised 2.3% of our total assets at March '23 compared to 3.5% at March '22. We are PSL compliance across all subsegments and at a headline level for FY '23. Composition of liabilities measured to average CASA ratio improved 66 basis points Y-o-Y. Quality of liability is measured by outflow rate improved 550 basis points Y-o-Y. We had strong all-round fee performance for the quarter. Our fee income stood at INR 4,676 crores, growing 24% Y-o-Y, 16% -- 14% Q-on-Q. Total retail fee grew 31% Y-o-Y and 14% Q-on-Q. Fee on retail cards grew 50% Y-o-Y, 9% Q-on-Q. Fees from retail loans grew 22% Y-o-Y, 12% Q-on-Q. Fees on retail foreign exchange and remittances grew 25% Y-o-Y and 22% Q-on-Q. Wholesale lending fees grew 27% Q-on-Q, and treasury fee grew 25% Q-on-Q. Trading profit for the quarter stood at INR 83 crores compared to a profit of INR 428 crores in the previous quarter and INR 231 crores for the same quarter last year. Operating expenses for the quarter stood at INR 7,470 crores, growing 14% Y-o-Y, 9% sequentially. The Y-o-Y increase in rupee crore expenses can be attributed to the following reasons: 28% is linked to volume, 34% is technology and growth related, 16% is related to integration expenses, and the balance 22% is [ BAU ]. Technology and digital spend grew 27% Y-o-Y and constituted 8.7% of total operating expenses. Staff costs increased 15% Y-o-Y and declined 5% Q-on-Q. We added 6,083 people from the same period last year, mainly to our growth businesses and technology teams. The decline in staff expenses in the quarter is largely attributed to a true-up provision for variable pay accrued in previous quarters to the current year, no longer required. We continue to hold social security code provisions, aggregating to INR 228 crores. Cost-to-income ratio, excluding exceptional items, for Q4 is 45%, improving 553 basis points year-on-year. The sequential change in cost-to-income ratio can be attributed in the large part to lower trading income and incurring of integration expenses related to the acquisition in the month of March '23. Operating expenses to average assets stood at 2.25%, higher by 8 basis points Y-o-Y and 1 basis point sequentially. We remain committed to consciously investing in our focus segments. The lower credit cost over the past few quarters has provided some headroom to run operating costs at slightly elevated level. The acquired Citi business is entirely retail, which understandably runs at higher cost and higher return ratios. The Citi business is ROE-accretive post integration. The cost ratios will remain sticky till the Citi integration phase is over. This does not impede our ability to deliver our aspirational ROE. Operating profit for Q4 FY '23 is INR 9,168 crores, increasing 42% Y-o-Y. Core operating profit INR 9,084 crores, growing 46% Y-o-Y, 3% quarter-on-quarter. Provisions and contingencies for the quarter were INR 306 crores, declining 69% Y-o-Y, 79% Q-on-Q. The bank has not utilized any of its COVID provisions. During the quarter, this provision is entirely prudent. Annualized credit cost for Q4 FY '23 is 22 basis points, declined 10 basis points Y-o-Y and 43 basis points Q-on-Q. Profit after tax, excluding exceptional items, INR 6,625 crores, growing 61% Y-o-Y, 13% quarter-on-quarter. Consolidated ROE, annualized, excluding exceptional items, for Q4, stood at 2.18%, including 64 basis points Y-o-Y, 18 basis points Q-o-Q. Subsidiaries contributed 8 basis points in the quarter. Consolidated ROE, annualized, excluding exceptional items, for Q4 FY '23 stood at 21.58%, improving 500 basis points Y-o-Y and 177 basis points Q-o-Q. Subsidiaries contributed 46 basis points to consolidated ROE. The cumulative non-NPA provisions at 31st March 2023 stand at INR 11,928 crores, comprising COVID-19 provisions of INR 5,012 crores, restructuring provisions of INR 812 crores, which includes unsecured retail at 100% rates and the rest asset classes at first bucket NPA. Standard asset provision is higher than regulatory rates of INR 2,276 crores, weak assets and other prevalence of INR 3,828 crores. Our journey to be self-sufficient on capital is progressing well. The organic Axis business accreted 69 basis points of CET1 product [ cycle ] '23 . We consumed 191 basis points for the Citibank India Consumer Business purchase transaction after accounting for purchase price, harmonization and stamp duty expenses. We have proposed a dividend of 50% or INR 1 per share, in line with the dividend rate declared in FY '22. Our total capital adequacy, including profit but after proposed dividend for FY '23, is 17.64%, and our CET1 ratio is 14.02%. The COVID provision translates to a capital cushion of 51 basis points over and above reported capital adequacy. Our LCR ratio for the quarter is 129%, that's the average LCR ratio, as compared to 116% in the previous quarter. Excess SLR stands at INR 75,071 crores. The RWA intensity for the bank on 31st March 2023 stands at 65%, improving by 75 basis points, i.e., the book has lower risk-weighted assets as compared to the previous quarter. Amitabh has discussed the progress on customer acquisitions, growth in liability and loan franchise in his opening comments. I would request you to refer to Slides 33 and 34 for details around the quality of our liability franchise and slides on our loan franchise. Our CASA ratio on an MEB basis was 47%, improving 215 basis points Y-o-Y, 261 basis points Q-on-Q. Our loan book continues to be more granular and witnessed strong sequential growth. The loan book is well balanced with retail advances at 58%, corporate loans at 31% and CBG at 11%. 68% of our loans are floating rate, 42% of our fixed rate book matures in 12 months. The breakup of the floating rate loan book by benchmark type and the MCLR repricing frequency is set out on Slide 25 of our investor presentation. Moving to our retail book. Retail advances grew 22% Y-o-Y and 14% sequentially. 78% of the book was secured, unsecured disbursements for the quarter constituted 20% of the total disbursements. Q4 FY '23 retail disbursements for home loans grew 43% quarter-on-quarter, rural disbursements grew 56% quarter-on-quarter, small business banking disbursements grew 57% quarter-on-quarter, personal loan disbursements were up 20% quarter-on-quarter. Cards and PL portfolio grew 97% Y-o-Y and 21% Y-o-Y, respectively. The credit card spends for Q4 FY '23 grew 57% Y-o-Y and 14% quarter-on-quarter. Wholesale banking. We are progressing well on our endeavor to build a profitable and sustainable corporate bank. Details of rating composition, incremental sanction quality is set out at Slide 49. The corporate loan book grew 14% Y-o-Y and 6% quarter-on-quarter. The offshore wholesale advances are largely trade finance related and primarily driven by our GIFT City branch. 96% of overseas standard corporate loan book is in branch in GIFT City branch is India linked, and 92% is A- -- rated A- and above. The commercial banking book grew 23% Y-o-Y and 13% sequentially. The quality of the CBG franchise we are building and the strong relationship-led approach is reflected through our CBG current account balances, on a QAB basis, growing 13% Y-o-Y. Overall fees from CBG increased 29% quarter-on-quarter. 86% of the CBG book is PSL compliant. Detailed performance of our subsidiaries are set out on Slides 76 to 82 of the investor presentation. The domestic subsidiaries reported a total annualized net profit INR 1,304 crores, which translates into a return on investment for the bank at 50%. Axis Finance delivered strong growth as the full-service customer-focused franchise, offering retail as well as wholesale banking solutions. In FY '23, overall AUM grew 35% Y-o-Y. Retail book grew 67% Y-o-Y and now constitutes 41% of the total loans, up from 17% 2 years ago. PAT grew 30% on a Y-o-Y basis to INR 475 crores, ROE at 17.9% and at healthy capital adequacy of 20.5%. Strong asset quality with net NPA of 0.36% and negligible restructuring. Axis AMC total investor base stood at 12.9 million. Its FY '23 tax grew 16% Y-o-Y to INR 415 crores. Axis capital PAT stood at INR 142 crores. Axis Securities new client additions were up 28% Y-o-Y, broking revenues were up 9% Y-o-Y, and PAT stood at INR 203 crores. Asset quality restructuring and provisioning. The slippage GNPA and NNPA and PCR ratios for the bank and segmentally for retail, CPG and corporate are provided on Slide 69. Reported GNPA improved 36 basis points quarter-on-quarter, reported net NPA improved 8 basis points quarter-on-quarter. Recoveries from written-off accounts for the quarter was INR 823 crores. Reported net slippages in the quarter, adjusted for recovery from written-off accounts, was negative INR 147 crores, of which retail was INR 807 crores, CBG INR 26 crores and wholesale a negative INR 980 crores. Reported gross slippages for the quarter, including onetime day 1 impact of Citi India Consumer Business, was INR 3,375 crores, lower 15% Y-o-Y and 11% quarter-on-quarter. Further, for the quarter, 35% of the reported gross slippages are attributed to linked accounts of borrowers, which were standard when classified or have been upgraded in the same quarter. Reported net slippages for the quarter were INR 676 crores. Of this, retail was INR 1,179 crores, CBG at INR 112 crores and WBCG, which was the wholesale bank, at a negative INR 615 crores. Details of the BB & Below pool and restructuring have been provided on Slide [ 90 ] of our investor presentation. Banks are required to report the digital banking segment as a subsegment within the existing retail banking segments from Q4. This disclosure includes the business and related income sourced through digital banking units along with other products and services based on the definition of digital banking as stated by RBI in a circular. Axis 2.0, which we have previously discussed, is completely digital and not comparable to this disclosure. To summarize, Axis Bank is progressing well to be a stronger, consistent and sustainable franchise. Our franchise is strong, resilient and getting more sustainable, visible through organic [ Axis ] business CET1 accretion, excluding exceptional items of 69 basis points; COVID provision buffer of 51 basis points of capital, overall coverage ratio of 145% of GNPA and limited COVID restructuring of 22 basis points of our gross customer advances. Consistent delivery across our key initiatives and disciplined execution in our focus segments has resulted in a consolidated ROE for the quarter, standing at 21.58%, improving 500 basis points Y-o-Y and 177 basis points Q-on-Q. We've delivered above our aspirational consolidated ROE target for the full year '23. Our liability improvement journey is progressing well with our Q4 QAB and MEB CASA at 44% and 47%, respectively, improving 80 basis points and 215 basis points, respectively, on a Y-o-Y basis. The liability franchise is getting granular. Reduction in outflow risk gives us comfort that we've laid a strong foundation. Improvements planned over the next 8 to 9 quarters should deliver results with inter-quarter fluctuations, which are normal for a business of our scale and size. While we are well placed in the current macro environment, we continue to closely monitor the geopolitical environment, inflation, both domestic and international, and liquidity risk and its impact on our cost of fund, resultant policy action and its impact on our business and clients' businesses. Thank you. We'll be glad to take your questions now.

[Operator Instructions] The first question is from the line of Mahrukh Adajania from Nuvama.

So my first question is that this would include 1 month of Citi's income, right? I mean Citi's P&L?

Thank you, Mahrukh, for the question. Yes, it would include specific P&L for the month of March.

Okay. And my other two questions are, firstly, on operating [ expense ]. Basically, you've given a breakup in the notes to accounts of INR 5 billion for provisions and for OpEx on harmonization. That is part of the INR 20 billion or INR 15 billion Citi-related OpEx over 2 years that you had pointed out?

No, Mahrukh. I think what we've given in the AFR Note 5 is the cumulative exceptional items of INR 12,489 crores, of which, we have said, operating expenses is INR 129.33 crores and stamp duty cost is INR 180 crores. This is transaction-related expenses. I had specifically called out in our communication previously that we will incur integration expenses of INR 1,500 crores post tax over the next 18-month period. Therefore, the INR 12,489 crores does not include integration expenses. Integration expenses are recurring. And integration expenses are, therefore, sitting in the operating expense line on a reported basis this quarter.

Got it. And my last question is just -- so I know that you said that you'll grow 400 to 600 basis points above the sector. But what's your view on sector growth and deposit growth specific to your bank, right? . And also, how that translates into branch expansion? Because it -- because the HDFC Bank is likely to set up many more branches. Would you want to scale up your branch expansion, given that deposits are getting tight in the system?

We don't give guidance for next year. I think what we have consistently maintained through our analyst commentary has been that we are very confident that in the medium to long term, given the platform, given where we stand, we can grow 400 to 600 basis points faster than the industry. As far as the overall credit growth and the deposit growth is concerned, I think you have already seen that the credit growth has come off a little bit. Our projection for next year on the credit side is 12% to 13%, and our deposit growth is expected to remain in the same zone as well it is today. So the numbers speak for themselves. This potentially is not sustainable over a long period of time that we have a deposit growth, which is lower than the credit growth. And as I said, we maintain the stance that we will be able to grow at a certain rate. Your second question was around...

Branches.

Branches. Thanks a lot. As far as branches are concerned, I think we have maintained a pretty consistent stance that we believe that the combination of opening new branches, our mobile app, which for us is the largest [ branch ] for us, the fact that we have these business correspondent relationships, the fact that we expanded our VLE network is a way to reach our customers in different forms, in different ways, and we'll continue to build on that strategy. We are, at this point in time, quite clear that we expect to add up to 500 branches this year. Obviously, we keep calibrating our thought process around it as the year will move on. We would obviously like to get them out of the way as quickly as possible. We do not want to react to what others are doing. We want to do what we believe will be the right way to grow our business and grow our deposits and reach our customers in a particular way. And that's what we'll continue to do as we go forward. But yes, it is very important to look at what others are doing and keep calibrating our strategy on that basis, and we'll continue to do that as we move forward. And if there is a change in that strategy, we'll obviously let you know.

The next question is from the line of Kunal Shah from Citigroup.

So my question was with respect to yields and on a calculated basis despite whatever you have mentioned with respect to increase in retail plus SME and maybe the lending profile which we have. Still, there is not much of an increase on a quarter-on-quarter basis on yields. So one is in terms of the excess liquidity, but what could be the other reason for that, yes?

Kunal, principally, what I said earlier -- thank you for your question. What I clearly called out earlier for your consideration is there is a 6 basis point impact on net interest margins because of the 13% average LCR -- higher average LCR maintained through the quarter. That, effectively, should explain any [ bridge ] that you're trying to work through.

Okay. But ideally, with this lending profile, in fact, the yield expansion should have been higher on a quarter-on-quarter basis, maybe 6% plus improvement on a calculated basis. So that still seems to be suggest a slightly lower number, yes?

So Kunal, I think -- and instead of specifically getting into the computation you are running, my request would be for you to look at what we've disclosed on Slide 25 of our investor presentation. We've clearly said that our loan spreads have expanded by 4 basis points as per our computation on an average basis. And overall, we feel comfortable with the low yields that we are currently running at for the bookings that we have.

Okay. And any reason for running this excess SLR at [ 129% ] -- maybe LCR at 129% in excess of [ SLR ] INR 75,000 crores?

If you look at the historical LCR that we have maintained, it has been in the region of 116% to 121%. This quarter was 129%, so about 8% extra. All of this was explained by the fact that we had to pay for Citibank acquisition of about INR 12,000 crores, for which we were carrying excess liquidity. Partly, we had a much better outcome on [ cash flow ] side depending on basis for the transaction banking-related flows that we received. So that resulted in much higher balances in direct deposits and much higher holdings in government bonds. So both of these have contributed towards this increase in the LCR of 129%. I think it will normalize over the next few quarter.

Okay. Okay. And last question is on write-offs being higher. So is there anything to do with the acquired Citi portfolio because these NPAs are given separately? But any impact of Citi on write-off?

Kunal, the entire Citi portfolio is retail led, and I have a rule-based policy of writing off retail loans that I have discussed with you previously. Given that the portfolio was just acquired a month ago, they would be limited to no impact of the Citi portfolio [indiscernible].

Okay. So INR 2,400 crores is entirely Axis Bank standalone?

Across all 3 segments.

Next question is from the line of Adarsh from CLSA.

Congrats. First is on OpEx. I just wanted to understand, as you get into '24, your -- you'll have a full year of higher OpEx business costs running in [ new live ] branches as well, and overall, the cost to asset of acquired Citi business would be more. So just wanted to understand, do you want to recalibrate your guidance of 2%? Or you think over a 3-, 4-year period, you will get there?

So Adarsh, thanks for the question. I think very fair. What I have tried to do is if you reference Slide 28 of the investor presentation that we put out, we've given a broad sense of what our cost to assets for quarter 4 is, which is 2.25%. And then you see a dotted line which is showing you a number of about 2.40%. This is post annualization of costs booked for one month. That should be a fair indication of the annualized impact across integration expenses and cumulative book taken out. To the second part of your question, yes, we have a guidance out there which said we would expect to get to around 2% by FY '25. We will work hard towards normalizing the number. But very clearly, the Citi business is entirely a retail business. Retail business is done at higher cost ratios. And therefore, there should be a recalibration in all our minds to where that calibration [indiscernible]. That's broadly what -- that's broadly how I would respond to your question. We've also said that against FY '25 exit, we're saying in the medium term, we stay committed to getting to the 2% cost to assets. It might be slightly later, but that commitment stands.

And Puneet, just clarifying, the 2.4% number includes both the running cost, which is a higher OpEx business, and the one-off integration costs. Does that include both or that only runs -- includes the running costs?

So it includes both [ basis of that ] estimate that we have currently.

Got it. And second thing is on margins. Let's say, we are at 420-ish with some liquidity buffer. So -- and we'll get into the next 2 to 4 quarters where cost of fund will catch up with yields, which had moved up earlier. So just wanted to understand, we had earlier indicated a margin band. We had some fundamental improvement in our business also. So what's your comfort zone on margin looking like if I look -- if I want to look 12 months out?

So Adarsh, I think we stick by the fact that we don't guide what absolute margins are, but let me present a framework that may help think through the issue. FY '23 full year, we've called out is 4.02%. We started on a lower number. We ended on a higher number. We report on a quarterly basis, the [ numbers exist ]. Our quarter 4 annualized is 4.22%. What we have -- and at a full year FY '23 NIM of 4.02%, I have delivered an ROE of 18.83% on a full year basis. I go back to what I have consistently said. We have a 40 basis point cushion over the structural NIM guidance that we have. We will continue to work on the 5 initiatives that I have spoken to you about on improving our net interest margin. Yes, there will be a lag effect of deposit cost increase. We will maintain our endeavor to maintain as much as the cushion that we have built for a sustainable period. We do not guide a specific outlook for 12-month margins...

[ And Adarsh, just ] to supplement what Puneet said, and he has said it, but I just want to emphasize it, we worked very hard to get here. And our endeavor, as Puneet said, would be to ensure that we continue to maintain as much of the cushion as possible. You know all the factors which are working against us. Puneet has talked about the 5 kind of initiatives or potential ways and means we have to mitigate some of the rising cost of deposits. We also have the added benefit of the extra LCR, which we are carrying. Again, we'd not like to guide it, but please understand and appreciate that the endeavor of the management team is to remain [ as much in the zone ] as possible. But we know some things are working against us very clearly.

The next question is from the line of Abhishek from HSBC.

So just a question on -- so in the Analyst Day back in November, I think you had shown a slide where you had shown a movement of lendable deposits versus non-lendable deposits. And the lendable deposits had gone up, I think, 10% in the first half; non-lendable down about 17-odd percent. Can you give an update on how that has trended? Ideally, it would have improved further, the mix.

Abhishek, thanks for the question. The one way -- the other way to look at the same data point is the reduction in outflow rates. As Amitabh called out in his opening remarks, our outflow rates on a [ margin ] basis, reported basis are down by about 550 basis points. So if we had an outflow rate of 25%, 26%, our outflow rates would be in the 21%, 22% range now. That itself shows you the improvement in the quality of the deposits. As outflow rates decline, lendable deposits, by implication, increase.

Right. No, that's useful. Another thing is on the yield side again. I have to come back to that. But if you look at just the yield on advances, is there any particular sector where it has become increasingly difficult to pass on yields? Because your loan mix has moved favorably in the last 4 to 5 quarters due to all the efforts that you've taken, but the yield is not reflecting a commensurate increase. So is there any sector where you're finding it difficult to pass on the rates? Or any comment there would be helpful.

No. So firstly, I'm a bit surprised by the comment that there is no commensurate increase in yield. I mean we have worked very hard to increase our NIMs, which have moved from 3.4% to 4.2% partly, obviously -- one of the reasons we've been able to do it is we've been able to increase our yields, and that is [ reflected ]. In our case, it has happened faster and -- comparing to some of the others because we push through some of these changes faster than some of the others. So it can't be timed exactly as maybe someone you might be comparing us to. As far as generally that the overall business is concerned, we don't give some guidance on where the yields are falling, where the yields are up. But if you check the market, you know that on the wholesale side, the pricing has been tough for quite some time. It's opened up a little bit now. Mortgage, every bank, every NBFC seems to be going after that segment. The pricing has always been tight there. And as far as some of the other sectors are concerned, depending on which bank wants to drive growth in which quarter. So you do sometimes see competition intensity, which is more than what you anticipated. That happens with the market all the time. But we are on a particular track. We have a certain strategy. We, as I have just mentioned in the answer to the previous question, one, we'd like to ensure that we remain at a certain level. And we'll be very disciplined about maintaining some of those metrics at those levels because we've worked very hard over the last 6 to 8 quarters to get them there. And as I said, we believe the platform which we have allows us to maintain the metrics at those levels. I'm not giving you a very specific answer, but I think you need to understand in the sense of what we're trying to do in Axis Bank.

Sure, sure, sure. And just one quick question on fee growth. The sequential movements have been very strong. How much of that is durable? And how much would you attribute to a, let's say, year-end effect? Typically, March would have a bunch of effect?

Well, everything we are doing in Axis is to trying to build a granular business. Nothing is being driven one-off, onetime or pushing it towards end of the quarter or end of the month. Yes, you can have some transactions, some things which worked out and you had a little bit of a [ start ]. But otherwise, please understand and appreciate, the entire drive over the last 3.5, 4 years was to get everything granular so that we can repeat our numbers quarter-on-quarter on a predictable basis. As I said, we are -- towards the end of my remarks that we are trying to build an all-weather institution that will stand the test of time by doing [ a lot of things ]. You don't create an institution [ out of nature ]. So long answer, but please assume things are granular.

Next question is from the line of Saurabh from JPMorgan.

So just [ 2 ] questions. One is just on the sustainability of the credit cost. So if you look at your recovery upgrade momentum, it is very high, almost 75% [indiscernible]. So how would...

Saurabh, sorry to interrupt you. We lost your audio in between. [Operator Instructions]

Is this better now?

Yes.

Okay. So just firstly on the sustainability of the credit cost. So recovery upgrade momentum is quite high this year. How should we think about it going into next year? Would we expect this momentum to start moderating [indiscernible]? Just how you think about your credit cost businesses? The second is, can you help us [ one month ] [indiscernible] profit of the CD portfolio? And lastly, in terms of Axis Finance, the growth is very high. [indiscernible] retail business of a low base. What kind of customer segments or retail business [indiscernible]?

So as far as Axis -- let me answer the Axis Finance growth question first. I think, yes, Axis Finance has been trying to grow the retail side of the business quite actively. They are into [ lakh ]. They are into business loans, and I think they have built up a niche for themselves based on some of the technology and the kind of customer end-to-end solutions they have developed. The portfolio quality is pristine at this point in time. They've also developed what they call emerging market business, which is more the SME side of things. Their overall wholesale business continues to do well. Axis Finance has also sold a pretty decent portfolio through the year because they were getting very good rates, and that is also reflected in the P&L. We are quite positive about how that business is being built. And obviously, Axis Bank is very, very supportive of what they're trying to do. They intend to continue to expand the franchise as we move forward. Actually, they just completed 10 years and is one of the fastest-growing NBFCs if you look at in terms of their growth and profitability in a 10-year history. So we are very, very happy with what they have achieved.

[indiscernible]?

Yes, on the credit cost side, before Puneet kind of jump in, I would like to make one quick statement that please understand and appreciate that we've pivoted to better asset quality. I think our numbers are reflecting better asset quality. So first is that we need -- somewhere, we need to be start getting rewarded for the fact that the asset quality has moved so well. So the credit costs have gone down. And while I understand and appreciate the question that this current level of credit cost is not sustainable, I would also like you to appreciate that this [ pivoting ] has happened in such a significant manner for Axis Bank, will, over a period of time, hopefully reflect consistent lower credit cost in comparison to competition out there because that's exactly what we have done. Puneet?

Yes, so fully agree. Saurabh, thanks for the question. Broadly, the upgrade and recoveries are reflective on the net credit cost number. But if you even look at where our gross credit costs are that we show you a data point, which is over 15 years and we show you every quarter, the gross credit cost itself has improved meaningfully, which is the point Amitabh was making that the underwriting strength of the bank has clearly improved. The last question that you had was [indiscernible] for one month. We are operating Citi India consumer business and Axis Bank as one bank. And therefore, we will report as such. We don't intend to report Citi independently [indiscernible] basis. So that's the number [indiscernible].

Next question is from the line of Hardik Shah from Goldman Sachs.

Just circling back to the yields point to, Amitabh, what you said the delta that you've seen may have been ahead of others. But...

Rahul, can you speak a bit louder?

Yes. Is this any better?

Just speak loudly -- a little bit loudly.

Is it better?

Yes, perfect. Yes.

Okay. So I was just circling back to the yields point. So Amitabh, you said you've got the delta maybe slightly ahead of what others may have got. So keeping in mind the loan book mix that we've got, which has MCLR and even some of the fixed trade portfolio as that is getting repriced at higher rates. But do you reckon that despite all of it, we have now started reversing the yields? I mean are we going back on this stage on the cycle given whatever the competition that you talked about? Or we still have some room available to kind of maintain or [ push up ] this number?

Rahul, let me first start by saying we don't give any guidance. On one side...

No, no, it's not about -- I'm just trying to understand the [ risk of it ].

Yes, [indiscernible] to answer. I'm not [indiscernible]. On one side, we have factors which are working against us, including repricing of deposits and slow deposit growth. On the other side, as Puneet has always mentioned, that we have 5 factors at play where there is still some scope left to continue to push for improving our overall wins. Over and above that, if you look at within retail and wholesale, the growth, for example, if you will combine the mid-corporate, the, what we call, the CBG and the business banking segment, that continues to have seen a pretty meaningful share increase and overall share in the -- our overall earning assets. So there is also a kind of a product mix factor at play. We are -- while not giving a guidance, we have stated quite vociferously that our intention is to try very hard to be in the zone where we are. Obviously, some factors could play up and result in some of the numbers going here and there. But our intention is to stay there. So while not giving a guidance, we are trying to say that we have factors working on both sides. Let's see where we end up. And we are -- we'll continue to strive hard to ensure that we [indiscernible] reflect all the hard work we have done. We're also held by the fact that in the last quarter, our LCR has gone up and there is some play there also.

Understood. That's helpful, Amitabh. The other question was on -- just trying to understand the growth trajectory now that the integration may be going on full swing. How should we think about how the growth will look like over the next couple of quarters? When do we expect some delta to start reflecting from the Citi customers in the portfolios where they are significant?

So we have taken it over as of March 1. That's when we really got an idea of the -- we did not have any data before that. We've got no idea of the customers. As we said, the senior management team had been visiting some of these customers and getting a sense for [ what policies out there are ]. We have also mentioned that we saw 60-plus synergy initiatives, which could be undertaken by Axis through the combination. I also mentioned that [ 20-plus ] synergy initiatives are already in play in the first quarter, and the synergy benefits are obviously around 3 things. They are around deposits, they are around revenues and expenses. So these things will play out through the year and beyond because we are also, please understand and appreciate, going through the transition to LD2 when all the systems, all [ the cards ], all -- every technology will be onboarded onto the Axis platform. So while changing the wheels of the car, we are obviously pushing through synergy benefits. There's a separate team that is working on it. There is a team of senior management people who are in charge of ensuring that the synergy benefits are delivered. So if you are expecting uplift, you should start expecting uplift coming through from the second quarter onwards. We're not guiding on what the ruble would be, but I'm just telling you that the work is going on as we speak.

Got it. Just one final question, maybe to Puneet, on the cost side. Due to integration, the only thing now that is left is -- or rather, the merger cost, the only thing that is now left is the integration cost, right, which is INR 1,500 crores over the next 18 months that you have alluded to a couple of times.

Yes, Rahul, all onetime costs with respect to [ ITS ] have been dealt with. The INR 1,500 crores is post tax, and we incurred over in 18 months [ fixed ]. That's [indiscernible].

Next question is from the line of M.B. Mahesh from Kotak Securities.

I mean, sorry, I do have to have a similar question on the yield side. Post the acquisition of Citi, when we look at the next couple of quarters, is the [ housing rates ] reflecting the book at which you are carrying today and also for the credit card book and also on the deposit side?

Mahesh, thanks for the question. Didn't fully catch it. Could you just help me with that question again, please?

I guess we just don't know at what yields where the portfolio acquired at. And when you compare that book with yours, is there room for an improvement or would you see some pain as we go forward on the -- when you look at the overall portfolio, both from a housing yield side, the kind of credit card book that they are carrying as well as term deposit and the savings account rate that they were enjoying?

Understood, Mahesh. Thanks for clarifying. Just to set context, the total Citi asset book that came over was approximately INR 29,000 crores. That's about 3.5% of the total assets at Axis level. Off that book, on a pro forma [indiscernible] basis that we did in January, INR 9,000-odd crores was credit cards, and the balance was mortgages, [ autos, CDP ]. So first and foremost, on a cumulative number basis, will this move the yield insofar as the noncards business is on Axis bookings? No. On a disbursement yield basis, I have said, we've decided to operate as one franchise. And therefore, disbursement yields should be consistent. We don't want to have internal competition vis-à-vis the customer. On credit cards, the Citi franchise, obviously, was a superior franchise in terms of both spend on cards, and that we hope we will continue to sustain.

Okay. Okay. I'll take this question offline again. But the second question, Amitabh, you had kind of indicated there is a potential slowdown that you're seeing on growth side. Any possible reason for calling it out this early? Is there a demand slowdown that you're seeing? Or is there any kind of risk that you're seeing out there that you're worried of?

Mahesh, I think the narrative on what is going to happen in the world has changed every one month. My reference with, I think, the comment you're referring to was at a time when people were talking about rapid increase in interest rates globally because of what had been happening. After that, obviously, this was going to the banking crisis. I think things have improved a little bit, though, again, we don't know. You know what is going on in the U.S. as we speak. I think the more -- the macro remains volatile. And in a volatile environment, to say everything is going to be gung ho and things are going to all look up and nothing else can happen, I think it would be foolhardy on our part. So what we're really saying is on one side, we have a platform we can capitalize all the [ volatility ] that comes our way, and we will grow at a certain rate above the industry. But at the same time, it is very, very important for us to be cognizant of some of the risks out there which could play out and to [ reunite ] all those risks as and when they emerge and to be able to change our path, our way, to ensure that we don't get hit by unexpected risks and unexpected losses that [ we think will return ] the other way. I'm not expecting Indian economy to go south. I'm just saying that if things were to slow down, if interest rates [ level were ] to rise, we could have potentially a problem in terms of how risk could play out. So the comment was said in that context. I think it has somehow been taken to mean that I'm saying that there will be a slowdown. We're not seeing a slowdown. I think our numbers in this quarter very clearly reflect that the growth in all our asset classes have done extremely well. Even on the deposit side, I think we compare quite well to some of our peer banks, and we will continue to strive for it. But macro remains volatile, and we are very watchful. That's what I mean.

The next question is from the line of Sumeet from Morgan Stanley. [Operator Instructions]

Am I audible?

Yes, but your voice is breaking. [Operator Instructions] The next question is from the line of Jai Mundhra from ICICI Securities.

Yes, thanks for the additional disclosure. I had a question on loan growth. So while I understand that we don't give guidance and we have the stated aim of growing 400 to 600 basis points ahead of the industry, for FY '23, if I exclude Citi, then we are very close to the industry. And this year, probably we had one of the best tailwinds for NIMs. So I wanted to check as to what were the 2, 3 key constraints which limited our loan growth to -- similar to industry level and to what extent you think they have been addressed?

So if you look at our numbers for the year, and I'll ask Puneet to supplement, our growth rate on the wholesale side was quite muted for the first 3 quarters because they -- we calibrated where we realized we're not getting the kind of pricing which we want. And we did not want to participate for the sake of participating in whatever transactions which are coming our way. And we've been stating that consistently in the first 3 quarters, and we saw the pricing kind of opening up. You saw that in the third quarter, we showed some growth in the wholesale side, and the fourth quarter has shown even more healthy growth. So for the -- a large part of our book did not grow that much in the first 2 quarters, and we [ had muted ] growth in the third quarter. Similarly, on the mortgage side, you would see that we have been quite cautious in the first couple of quarters because of the same reason. We saw intense competition. We saw people were cutting prices. And again, we were quite cautious in terms of just going out there and offering loans at a certain rate that did not make sense to us. As things have stabilized, I think we have demonstrated very clearly in this quarter that we can grow faster than the industry. As we've always said, you can't deliver 400 to 600 every year. But in the medium- to long-term basis, we believe that that's the kind of growth we can demonstrate over a certain period of time. And that's the growth we are very confident we can deliver as we continue to move forward because we have the platform. We have the reach. We are digitizing extremely fast. We are seeing the impact of our products in the marketplace. We have gained market share across various asset classes. And that's where the confidence comes from. So that's, in a nutshell, kind of a long-winded answer to your question.

Sure. And the last -- second and last question, sir, if you can talk about the pricing in your fixed rate book, right? So over the last 12 months, repo rate and [ EDNR-linked ] products would have seen a 250 basis point upward revision. And I think MCLR-linked book would have also seen a 150-plus kind of upward revision. What kind of upward revision in the yield would have happened for fixed rate book? And what kind of a scope do you see going ahead? Because it looks like that you are now more confident on growing the unsecured book. So I wanted to understand the scope. I mean so far, what has been the yield [ rise ] in the fixed rate book? And how should one look at the yield on this particular book?

Jai, thanks for the question. I respond to it, in part, in parts obviously we don't disclose, which is what is the yield on fixed rate book. The part that was [ expected ] to consider is something I said earlier in the conversation. 42% of fixed rate book matures in the next 12 months. That should give you comfort that if there is an uptick, it will get captured in the marketplace. We are very confident that we are not underpricing ourselves to competition. Therefore, book yield should get captured.

Right, sir. Okay. So if you can specify, sir, a fair range or maybe a broad range within which the fixed rate book would have repriced at least on incremental basis? So just to understand that if this 40% book gets repriced, then what kind of a yield impact one could see, if possible.

Yes, I'm sorry, we don't put that number outside. I actually wouldn't respond to that.

[Operator Instructions] Next question is from the line of Anand Dama from Emkay Global.

Sir, when we look at our SMA book, that is growing at a pretty faster pace. This quarter, we have grown almost about 13% quarter-on-quarter. So one, what is basically driving the growth? Which are the segments where we are growing? And [ have we included the ] yield on this portfolio in line with the increase in the [ repo rates ]?

So point one is that growth in this segment over the last 18 to 24 months has been strong and continues to be so. The portfolio is very well diversified across sectors and geographically. We also managed, from a risk perspective, the ticket sizes that we do on a per company -- per corporate basis within this space. And the yields, as far as the yields are concerned, this book is linked to repo. So therefore, the impact of higher rates as the repo rate increases has been passed on.

So we have [ already passed on ] the rate hikes, or like there has been some back and forth, like the customer comes back and basically [indiscernible]. Or there is competition as well, which basically leads to some kind of [indiscernible]?

They've been fully passed on.

Sir, secondly the question is for Amitabh, particularly on the corporate growth front. So as you said last year, there were some issues in terms of corporate growth, right? But how do you see the corporate trade picking up this year? Can you provide some [indiscernible]?

So we are seeing demand on the corporate side across multiple sectors in the -- for example, in iron and steel, commercial real estate, infra roads and NBFCs. So demand is quite robust at this point in time. We are also seeing a reasonably strong uptick in terms of private CapEx. However, not all private CapEx is being funded by bank loans given the fact that corporate cash flows continue to remain strong and corporates have delevered. They are using their own balance sheet to fund CapEx as well. So demand is -- continues to be strong and across multiple sectors.

[Operator Instructions] Ladies and gentlemen, we will take that as the last question. I will now hand the conference over to Mr. Puneet Sharma for closing comments.

Thank you, Neerav. Thank you, everyone, for taking the time to speak with us this evening. If there are any questions that we have not been able to take or clarify, we would be happy to engage with you and take them subsequently. Have a good evening. Stay safe. Thank you.

Thank you very much. On behalf of Axis Bank, thank you for joining us, and you may now disconnect your lines. Thank you.