Ladies and gentlemen, good day and welcome to Axis Bank conference call to discuss the Q2 FY23 financial results for the quarter ending 30th September 2022. Participation in the conference call is by invitation only. Axis Bank reserves the right to block access to any person to whom an invitation has not been sent. Unauthorized dissemination of the contents or the proceeding of the call is strictly prohibited and prior explicit permission and written approval of Axis Bank is imperative. As a reminder, all participant lines will be in listen-only mode. There will be an opportunity for you to ask questions at the end of briefing session. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. 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 & CEO, and Mr. Puneet Sharma, CFO. I now hand the conference over to Mr. Amitabh Chaudhry, MD & CEO. Thank you and over to you, sir.
Thank you, Steven. Good evening and welcome everyone. Apart from me and Puneet, we have on the call Rajiv Anand, Deputy MD; Amit Talgeri, Chief Risk Officer; and members of the bank's leadership team, Subrat Mohanty, Ravi Narayanan, Sumit Bali, Munish Sharda, and Sanjeev Moghe. The growth momentum in India continues to hold up well at a time when the majority of the world is staring at a slowdown, which is reflected in several macro indicators. The system credit growth and domestic consumption remain strong. We at Axis Bank remain optimistic on the growth of positive signs in the Indian economy and our ability to support and take advantage of them. In this quarter, we continued the strong performance in our identified strategic segments.
We saw continued momentum in granularization and premiumization of deposits, market share gains in Bharat and SME segments, industry-leading performance in cards, further strengthening of our transaction banking franchise, and acceleration on digital banking outcomes. A quick aside on digital banking. Today, we are the highest-rated mobile banking app in the world. We are extremely proud of it. I will speak about it later in this discussion. Coming back to the quarter, we stayed on course on three core areas of execution of our GPS strategy, which was around deepening of performance-driven culture, strengthening the core and building for the future. Let me now discuss each one of these in further detail. On performance-driven culture, we continue to show and deliver improving profitability metrics.
Our consolidated annualized ROE for Q2 FY23 stood at 18.9% and has consistently exceeded 15% in the last few quarters. While Puneet will provide granular details, let me highlight the trends across key operating metrics. Our core operating performance in the current quarter is strong on all parameters, both year-on-year and sequentially. Net interest margins improved 57 basis points year-on-year and 36 basis points quarter-on-quarter to 3.96 in the Q2 of this financial year. Fee growth of 20% year-on-year and 8% quarter-on-quarter, with retail fees up 28% year-on-year and 10% quarter-on-quarter. Core operating profit grew by 43% year-on-year and 19% quarter-on-quarter. OpEx growth moderated to 14% year-on-year and almost flat sequentially.
PAT at INR 53.3 billion was up 70% year-on-year and 29% quarter-on-quarter. The bank's ROA has significantly improved from 0.66% in FY 2019 to 1.66% in the half-year annualized, and consolidated ROE is up from 8.58% to 17.25% during the same period. Our ROE is up four hundred and forty-five basis points year-on-year. We lifted the growth trajectory and consistently gained market share. We now have strong market positioning in multiple businesses. On advances, we continue to grow faster than the industry with incremental market share of 7% in last three years and closing market share at 5.7% as of September 2022.
On deposits, we have gained over 69 basis points market share in three years to reach 4.7% as of September 2022. In credit cards, we continue to be ranked fourth largest with over 13% incremental spend market share in the last nine months against 11.4% period ending market share for cards in force. On the payment side, we continue to have strong positioning with 16% market share in UPI and 15% in mobile banking. Our Burgundy AUM has grown by 3x CAGR in over last five years, and today we are the fourth-largest player in wealth management business. Similarly, on the wholesale side, we continue to have strong market share in transaction-oriented core businesses with 12% market share in foreign LCs, 9% in NEFT payments, and 8% in RTGS.
We've also been the leading player in the GCM space over the last decade. The strong growth in our granular deposits continues with average CASA balances up 13% year-on-year. Our liability strategy driven through premiumization, granularization and deepening remains on track, reflected in 220 basis points year-on-year improvement in share of premium segment and existing to bank retail savings deposits. From an NPAs perspective also, we continue to see improvement in the quality of our deposit franchise. Early improvement in the quality of granular liability growth is visible through reduction in outflow rates. The steps we have taken towards improving the quality of liability franchise have definitely started yielding results. However, this is the beginning of an improvement journey that will only gain traction over time. We are the fastest growing card acquisition franchise.
We issued over a million cards this quarter, up 88% year-on-year. Our credit card spends were up 70% year-on-year and 17% quarter-on-quarter, and card advances were up 47% year-on-year. Our loan to the bank strategy continues to progress well, with 31% of our cards sourced through partnerships. During the quarter, we launched a co-branded credit card in partnership with Samsung India that will help us to further increase card penetration in Tier 2 and Tier 3 cities. In Q2 , we continued to witness strong momentum across our focus retail and SME business segments that grew 22% year-on-year and 28% year-on-year respectively. The strength of our wholesale franchise is demonstrated through 9% year-on-year and 10% quarter-on-quarter growth in our domestic corporate loan book. We have achieved this while simultaneously improving our margins.
SME segment continues to remain a key growth driver for the bank. Our mid-corporate book grew 49% year-on-year and 9% quarter-on-quarter. Our SBB segment delivered strong growth of 69% year-on-year. The combined portfolio of the three segments, small business banking, SME, and mid corporate, grew 41% year-on-year and now constitutes 22% of the loan book, up 542 basis points in last eight quarters. Our government business performance remains strong as we continue to add new mandates and gain market share. This business has transitioned from being deposit-centric to more solution-centric. We continue to win single nodal accounts and stand among the top performers in private banks facing the central nodal account opportunity, both of which will help us to drive growth in government deposits.
Around fostering a winning mindset, our winning mindset is reflected in our strong business performance and multiple external recognitions we received during the quarter across digital, fintech innovation and other businesses. The bank's Axis Mobile app ratings on the Play Store have gone up from 4.6 to 4.8 now. As I said earlier, we are now rated as the world's highest-rated mobile banking app on the Play Store with over 15 lakh reviews, which is the highest across 59 global banks, eight global neo banks, and 50 Indian fintech apps. The Axis Mobile app has over 10 million monthly active users, close to 52% savings account, and 43% CA customer registrations, and 4 million-plus loan account registrations. The app now handles over 64% of all service requests by volumes and doubles up as our largest branch.
The bank, in partnership with CRMNEXT, won the Best CRM Implementation at The Asian Banker Financial Technology Innovation Awards for 2022. We also won the Data Engineering Excellence Award at Cypher 2022, hosted by Analytics India Magazine. This award recognized the bank for excellent use in producing outcomes at large scale with respect to our personalization project. During the quarter, the bank won 2022 Greenwich Excellence Awards for India large corporate banking and middle market banking segments for the second consecutive year. The bank was recognized for its distinctive qualities like ease of doing business, knowledge of transaction banking needs, coordination with product specialists, and customer service. The bank, Dubai International Financial Center branch also won Customer Service Excellence Award in the banking category at the recently held Middle East International Business Awards.
The bank's Bharat Banking segment also won the Best Digital Financial Inclusion Initiative at the ET Digital Lending Transformation Global Summit. As far as strengthening the core is concerned, our strong balance sheet lends support to drive our aspirations. Our asset quality is now among the best-in-class, with net NPA of 0.51%, high provision coverage of 80%, and standard asset coverage of 1.6%. Our internal accruals are becoming largely sufficient to fund the business growth in quarter one and quarter two. Our CET1 stood at 15.14% compared to 15.24% in March 2022. We continue to build our next-generation technology architecture. We have modernized the core and strengthened technology capabilities significantly in last few years to undertake transformational digital banking projects. Project Neo is all about building a world-class digital corporate bank.
Leadership on APIs is the cornerstone to win new clients and new transaction banking businesses from existing clients. Corporates are strategically pivoting towards APIs, and we have built a strong product market fit here via best-in-class developer portal, built an industry-best wide array of APIs spanning all transaction banking products, and delivering integrated banking experience through partnerships. We are witnessing a strong momentum in customer adoption and are partnering with our customers to offer the optimum solution based on digital maturity. We have become one of the first in the industry to launch a suite of trade APIs for corporate, with first customers going live successfully. Our digital onboarding through API developer portal and ERP-agnostic plugin enabled seamless onboarding integration for customers. We are seeing over 10x growth in transaction volumes and 2x growth in adoption.
We expect the momentum to sustain over the coming quarters as we further expand our capabilities and partnerships. What is extremely heartening is that adoption has been among the leading corporates in the country and across industries from financial institutions, government clients, to large conglomerates. Building for the future, we have created distinction in digital and are today a class apart. Our digital banking unit Open is now operating at scale. The impact of this is visible across various business segments. In line with our Open philosophy, we launched account aggregator-based loans and credit cards this quarter. We now have built the full stack for end-to-end digital lending and cards for both existing and new customers. Now, any citizen of India, our customer otherwise, can come to any of our digital channels and get instant digital paperless loans or credit cards.
We were the first bank to go live on the account aggregator framework, and we are the first to launch this capability. We are seeing good initial traction. Our disbursal volumes have grown 30% month-on-month since launch. This quarter, we launched a significant upgrade to our mobile app as part of our Channel two program. We have crossed multiple milestones and will be launching few more significant changes to our app going ahead. We have upgraded our developer portal and now made digital and self-serve the entire setup and UAT process. We believe we are now best in class in the country on this front. Our bank-wide programs to build digital decisioning, a quick update on that. Bharat Banking strategy continues to scale up well. Our decisioning initiative around Bharat Banking continues to deliver strong outcomes.
Rural and semi-urban markets are an important growth area for us, and we see significant opportunity to gain market share in these regions while driving higher profitability. During the quarter, we added 1,600 willing rural entrepreneurs to take our overall CSP daily network to 54,000+ that will act as extended arms for our 2,000 certified Bharat branches. As a result of our focused approach, we achieved strong 28% year-on-year growth in disbursements across all the major product segments and delivered 46% year-on-year growth in rural loan book. Our subsidiaries continue to create significant value. The one Axis approach now embodied across Axis Group is reflected in robust performance of our subsidiaries. The total annualized PAT of our domestic subsidiaries in H1 was up 14% year-on-year. A quick update on Citibank Consumer Business integration. The CCI approval is in place.
We expect to complete the transaction by end of Q4 of fiscal 2023, which is the legal closure date. At present, the integration management office with a steering committee is in place that's working across 17 key work streams around people, technology, and business operations. The progress on customer communications, design of end state operating model, day one business and operational readiness, and the performance of existing Citibank consumer business is trending in line with our expectations. In closing, the global geopolitical macro environment remains uncertain, which has prompted significant downward revisions by multilateral institutions of their growth and trade forecasts. In the domestic context too, there are few challenges. Inflation has remained above 6%, current account deficit is expected to be high, and deposit attrition in the system has been slower than credit growth.
The monetary and fiscal policy response in India has been agile while balancing the policy challenges towards the least growth sacrifice outcomes. These moves and our engagement with our customers gives us strong reasons to remain optimistic. I will take a moment to step back on how we have fared since the end of pandemic almost a year back. In the last four quarters, we have shifted our performance trajectory upward meaningfully. We are crossing 15+ ROE consistently. Our operating margins and NIM are in the zone of best performing franchises. We see acceleration in our focus segments, and there is an all-round improvement in all key performance metrics on deposits and assets. We are leading the way on digital technology, modernization, and innovation. We believe as a group, we are playing to our potential as we continue to build a strong, future-ready, and open franchise.
I will now hand over to Puneet for further comments.
Thank you, Amitabh. Good evening, and thank you for joining us this evening. We continue to make meaningful progress on strengthening our core business performance and ensuring that our balance sheet is resilient across cycles. I will discuss the salient features of the financial performance of the bank for Q2 FY23, focusing on our operating performance, capital and liquidity position, growth across our deposit franchise and loan book, asset quality, restructuring, and provision. Our operating performance in the current quarter is strong on all parameters, both year-over-year and sequentially. We have improved net interest margin significantly, delivered robust growth in net interest income, growth in granular fees, and controlled our operating expenses. The resultant strong core operating profit growth, coupled with benign credit costs, resulted in a significant improvement in our ROA and ROEs.
Net interest income for Q2 FY 2023 stood at INR 10,360 crores, growing 31% YoY, 10% Q1Q. NIMs for Q2 FY 2023 stood at 3.96%, growing 57 basis points YoY and 36 basis points Q1Q. Domestic NIMs crossed 4% during the quarter. We had clearly articulated the drivers of our NIM improvement journey. The progress against each of the key drivers in the quarter is as follows. Improvement in the balance sheet mix to loans and investments from other assets. Loans and investments comprise 86% of total assets as of September 2022, compared to 83% as of September 2021. Within advances, INR-denominated loans comprise 93% of total advances as of September 2022, as compared to 89% at September 2021.
Within advances, the retail and CBG segment comprise 69% of total advances at September 2022, as compared to 65% as of September 2021. Low-yielding RIDF bonds declined by INR 8,329 crores year-over-year and INR 4,612 crores sequentially. RIDF comprise 3.09% of our total assets as of September 2022, compared to 4.28% as of September 2021. The bank continues to improve its risk return profile on its loan book. Our net interest income as a percentage to average risk-weighted assets stands at 7.75%, improving 80 basis points year-over-year and 49 basis points quarter-over-quarter. Our fee income stood at INR 3,852 crores, growing 20% year-over-year and 8% quarter-over-quarter. 93% of our fee is granular.
Total retail fee grew 28% YoY and 10% Q1Q. Digital and mobile banking fee grew 45% YoY. Fees on retail cards and payments grew 53% YoY and 16% Q1Q. Fees from third party distribution grew 20% quarter-over-quarter. Transaction banking, including commercial card fees, grew 30% YoY and 11% quarter-over-quarter. Trading losses for the quarter stood at INR 86 crore compared to a loss of INR 657 crore in the previous quarter and a profit of INR 473 crore for the same quarter last year. The MTM is largely on our corporate bond book, 80% of which is AA+ and above, and 96% is rated A- and above. We do not expect an economic loss on this book. All else being equal, the pull to par period for this book is four to five years.
Operating expenses for the quarter stood at INR 6,585 crores, growing 14% YoY and flat sequentially. The YoY increase in rupee crore expenses can be attributed to the following reasons. 9% is linked to volume growth, 51% to technology and growth-related investments by the bank, 1% on statutory costs and the balance for BAU linked growth. Technology and digital spend grew 19% YoY and constituted 8% of our total operating expenses. Staff costs increased 12% YoY and declined 1% quarter-on-quarter. We've added over 2,015 people from the same period last year, mainly to our growth businesses and technology teams. We have continued to maintain the Social Security provision. The cumulative Social Security provision for the bank stands at INR 227 crores.
Cost to income ratios for Q2 FY 2023 at 46% improved 328 basis points YoY and 641 basis points Q1Q. Operating expenses to average assets stood at 2.25% for Q2 FY 2023, higher by 13 basis points YoY and 1 basis point sequentially. Given the strong momentum across all our businesses, we remain committed to consciously invest in our focus business segments. The lower credit cost over the past few quarters has provided us headroom to run operating costs at a slightly elevated level. We remain committed to achieving around 2% cost to assets in the medium term. Operating profit for Q2 FY 2023 was INR 7,716 crores, increasing 30% YoY and 31% Q1Q.
Core operating profit stood at INR 7,802 crore, growing 43% year-over-year and 19% quarter-over-quarter. Provisions and contingencies for the quarter were INR 550 crore, declining 68% year-over-year. The bank has not utilized any of its COVID-19 provisions. This provision is entirely prudent. Annualized credit cost for Q2 FY 2023 is 0.38%, declining 16 basis points year-over-year. Profit after tax stood at INR 5,330 crore, growing 70% year-over-year, 29% quarter-over-quarter. Consolidated ROE stood at 1.87%, improving by 59 basis points year-over-year and 39 basis points quarter-over-quarter. Subsidy contributed 7 basis points to the ROE for this quarter. Consolidated ROE for Q2 FY 2023 annualized stood at 18.90%, improving by 545 basis points year-over-year and 334 basis points quarter-over-quarter.
Subsidies contributed 41 basis points to the consolidated ROE this quarter. The cumulative non-NPA provisions as of September 30th, 2022 stand at INR 11,625 crores, comprising COVID-19 related provisions of INR 5,012 crores, restructuring provisions of INR 1,100 crores. Unsecured retail restructured loans have been provided at 100%, and the rest are provided at first bucket NPA rates. Standard asset provisions at higher than regulatory rates of INR 4,332 crores and weak assets and other provisions of INR 1,181 crores. Our provision cover, all provisions, NPA plus non-NPA divided by GNPA, stands at 138.35%, improving 1,454 basis points YoY and 484 basis points Q1Q.
Our capital adequacy ratio including profits for the half year ended 30 September is 17.72%. Our CET1 ratio stands at 15.14%. The prudent COVID provisions translate to a capital cushion of 55 basis points over and above the reported capital adequacy. Our LCR ratio for the quarter was 121%, improving sequentially. Our NSFR stands at INR 55,513 crore. Risk-weighted assets of the bank as of 30th September 2022 stand at 66%. Growth across our liability and loan franchise. Amitabh has discussed the progress on customer acquisitions, growth in liability and loan franchise in his opening remarks. Please refer slides 18 and 19 for details around the quality of our liability franchise and detailed slides on our loan franchise in our investor presentation.
Our CASA ratio on an NED basis was 46%, improving 172 basis points YoY and 251 basis points Q1Q. Our loan book gross of IBPC sold grew 19% YoY and 5% Q1Q. Our loan book continues to get more granular and balanced, with retail advances constituting 58% of overall advances, corporate loans at 31%, and CDD at 11%. 68% of our loans are floating rates, which positions us well in the rising interest rate environment. 45% of our fixed rate book matures in 12 months. Breakup of the floating rate loan book by benchmark type and MCLR repricing frequency is set out on slide 11 of our investor presentation. Retail advances grew 22% YoY and 3% sequentially. Unsecured disbursements for the quarter constituted 24% of the total disbursements in the quarter.
Q2 FY2023 retail disbursements for our small business banking, rural, and PL book were up 33%, 28%, and 26% YoY respectively. Cards and PL portfolio grew 47% and 22% YoY respectively. The retail loan book now represents healthy characteristics with 89% being secured. The credit card spend for Q2 FY2023 grew 70% YoY. Industry spend growth is being driven by a pickup in commercial card spend. We have consciously focused on growing the profitable retail card segment. We are progressing well on our endeavor to build a profitable and sustainable corporate bank. Details of rating composition, incremental sanction quality are set out on slide 35 of our presentation. Corporate loan book, including IBPC, grew 7% YoY and 6% quarter-on-quarter. Offshore wholesale advances are largely trade finance-related and primarily driven by our GIFT City branch.
97% of the overseas standard corporate loan book in Gift City is India-linked exposures, and 95% is rated A and above. The commercial banking book grew 28% year-over-year and 7% sequentially. The quality of the CBG franchise we are building and the strong relationship-led approach is reflected through our CBG card deposits on a quarterly average balance basis growing by 31%. Overall fees from the CBG business growing 14% quarter-over-quarter, and 87% of our CBG loan book being PSL compliant. Coming to the performance of our subsidiaries. Detailed performance of our subsidiaries are set out on slide 60-66 of our investor presentation. Domestic subsidiaries reported a total net profit for H1 FY2023 of INR 585 crore, up 14% year-over-year.
This translates into a return on investment of 46% and contributes 7 basis points to consolidated ROA and 41 basis points to consolidated ROE. Axis Finance delivered strong growth as a full-service customer-focused franchise offering retail as well as wholesale lending solutions. In Q2 FY 2023, overall AUM grew 53% YoY and 8% quarter-on-quarter. Retail book grew over 2.6x and now constitutes 39% of the total loans, up from 8% two years prior. Axis Finance's book quality continues to be strong, with net NPA at 0.42%, negligible restructuring and Stage 3 at 0.10%. Axis Finance H1 FY 2023 PAT grew 53% to INR 210 crores with an ROE of 16.6% and a CAR of 19.6%.
Axis AMC average AUM grew 4% YoY in Q2, and the equity AUM was up 8% YoY. The investor folios grew 34% YoY during the quarter to take the total investor base to 13.2 million. In H1 FY 2023, PAT grew 24% YoY to INR 183 crore. Axis Capital reported a H1 FY 2023 PAT of INR 64 crore. Axis Securities continues to see strong traction. New client additions in H1 FY 2023 stood at 0.38 million, up 97% YoY. The broking revenues for Axis Securities grew 9% in H1 FY 2023, and PAT for H1 FY 2023 stood at INR 100 crore. Asset quality provisioning and restructuring.
Annualized gross net slippage ratio for the quarter improved YoY and QOQ, with slippage GNPA, NNPA and PCR ratios for the bank and segmentally for retail, SME and corporate are provided on slide 52 of our presentation. GNPA was 2.50%, improved 103 basis points YoY and 26 basis points QOQ. NPA was 0.5%, declining 57 basis points YoY and 13 basis points QOQ. PCR at 80% improved 974 basis points YoY to 165 basis points QOQ. We have not sold any non-performing loans in the quarter. Recovery from written-off accounts for the quarter was at INR 709 crore, improving 32% YoY. Net slippages for the quarter adjusted for recovery from written-off pool was -INR 152 crore.
Reported net NPA slippage for the quarter is INR 557 crore, declining by 21% YoY. Gross slippages for the quarter were INR 3,383 crore, lower by 38% YoY and 8% sequentially. For the quarter, 39% of gross slippages are attributable to linked accounts for borrowers which have been classified as standard or have been upgraded in the same quarter. The double B and below book of the bank declined 26% YoY and 2% sequentially. COVID restructuring stands at 0.38% of gross customer assets. More details on the double B and below book and restructuring are set out on slide 56 of the investor presentation.
To summarize, consistent delivery of 15%+ ROE over the last three quarters, improving quality of earnings and with profits in H1 FY 2023 being sufficient to fund growth, we are demonstrating delivery across all the initiatives undertaken by the bank. Our CASA ratio at 46% on a QAB basis as at 30th September, and early improvement in the quality of the granular liability growth visible through reduction in outflow rates gives us comfort that we have laid a strong foundation for our liability journey. Our assessment is that improvements planned over the next 8-10 quarters are on track with some inter-quarter fluctuations, which are normal for a business of our scale and size. Focused growth segments like retail, SME, and with corporate with better AROCs continue to grow faster at 22%, 28%, and 49% respectively.
Our balance sheet resilience is visible through the strong capital adequacy and return ratios for this quarter. Overall coverage at 138.35% of GNPA and limited COVID restructuring of 0.38% places us in a good position in the current macro environment. We continue to closely monitor geopolitical, inflation.
Both domestic and international liquidity risk and its impact on cost of funds, impact on policy action by all organizations, and impact on our business and our client businesses as we move forward. We would be glad to take your questions now. Thank you.
Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. An operator will take your name and announce your turn in the question queue. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mahrukh Adajania from Nomura. Please go ahead.
Congratulations. My first question is on margins. Congratulations on an excellent margin achievement. I mean, how do you look at margins going ahead in the next, say, 2-3 quarters? Because there's still repricing left. You know, a part of the MCLR repricing, apart from the EBLR book, MCLR repricing is also yet to come in. How do you view margins in the next few quarters?
You know, very different. We don't give guidance on margin, but let me make a couple of comments here. One is that, you know, we have always talked about the fact that whatever we are trying to do in Axis Bank is to build a sustainable franchise and sustainable, you know, a P&L. The idea behind delivering a margin of this kind is we will sustain it in a particular zone. We have always been guiding that our first target is 3.8%, and obviously keep it there. We have now reached 3.96%. Obviously, we all of us will try very hard to ensure that we remain in the same zone. There are a couple of things which are at play here.
One is on one side, as you rightly pointed out, some deposits will get repriced. The overall interest rates might continue to rise, and so there is a potential in the future that our cost of deposits will rise faster than what we have seen till now. Secondly, on the flip side, yes, the impact of increase in some of the MCLR rates, which you talked about, will continue to come through. We will also hopefully see higher yields in some of our asset classes, and that will also take time to kind of feed into our system.
We have talked about the fact that, you know, we've been meeting the PSL requirements and our RIDF bonds are coming down, but that has again not played through in our NIMs because the impact on the spreads has been lower because what is maturing was at a decent rate. What is not maturing is at low rate. The fact that whatever we have done on the PSL side, the impact of that in NIM has not come through as yet. There are various factors at play. Obviously, Axis will continue to try to ensure that, as I said, in being in the zone, we'll also like to ensure that we use this opportunity to invest back in the business as well as we can.
I'm not giving you a guidance, but I'm giving you hopefully enough fodder to think through as to where we could potentially end up.
Sure, thanks. Just in terms of retail deposit growth, so you have given some numbers, and talked about granularization and premiumization. If you could give the like-for-like retail deposit growth or any quarter-on-quarter retail deposit mobilization growth so that we know the like-for-like number, because currently it's being masked by the conversion, right?
I mean, I'll give you some data points, not exactly maybe what you want. Our growth in CASA was 14% year-on-year, relative to industry, which is 10% year-on-year. We continue to be higher and faster than our market share growth in total deposits, where it was 10% for Axis versus 9% industry. First point is, CASA is growing faster. Second, we continue to focus on district level market share gains. The number of districts where our market share is greater than 5% has improved by nearly 35% since March 2020. Overall TD growth was restricted due to lower CD issuances.
Our premium segment, where you asked a question, premium segment savings deposits are growing at a faster pace, 18% year-on-year versus 14% for overall savings accounts, resulting in share of premium segment deposits going up by 230 basis points year-on-year. We saw 64% year-on-year growth in new corporate salary labels in H1 of financial 2023. Last, an important point, with increased focus on LCR accretive deposits in financial 2023, we have seen a 550 basis points improvement, we have attained in weighted run off of our TD. The focus is across every part of our franchise, and I'll give you some data points which will kind of prove that.
Thanks, just one last question on OpEx. Now it's remained flat for the last three quarters. Of course, Puneet did mention maintaining the medium-term guidance, but it actually remains flat. How do you think, how do we look at it going ahead?
Mahrukh, thanks for the question. Puneet here. The rupee flow number was, you observed, has been flat. I think our guidance is on cost to assets, and we do continue to maintain that medium-term 2%, around 2% is achievable, and we stay committed to that number. It'll have multiple factors. We have structural cost savings, we have growth, both of which will drive us to achieve that number. I think we're not offering shorter-term guidance on cost numbers as of date.
Let me just add to what Puneet said. You know, on the cost side, we have invested over the last couple of years. We also want to ensure that, you know, as you make the investments, initially you incur costs up front, but then you start getting productivity benefits to come through. You might see it as a constant cost for a couple of quarters, but I think the way you should look at it is that the investments which are made, now we are seeing the productivity benefits come through, and so while the costs remain the same, we are seeing a lift on the revenue side. You know, we'll obviously continue to.
As we see the productivity benefits come in and we see the growth come in, we'll make some more investments in costs, and hopefully now rather than again going through a cycle like that, it will flow, you know, together. The correlation will be sharper than what we've seen in the past.
Sure. Thank you so much, and congratulations once again. Thanks.
Thank you.
Thank you. The next question is from the line of Adarsh Parasrampuria from CLSA. Please go ahead.
I
Mr. Parasrampuria, sorry to interrupt, but you're not clearly audible, sir. May we request you to move to handset mode, please?
Okay. Yeah. Congrats, Amitabh, Puneet and team. Question is on the, you know, the margins, right? You did give a lot of details around the improvement in the mix, in terms of investment, INR loan, the retail within that unsecured and then RIVs. We obviously had a very large margin improvement. Part of it would be related to where the rate cycle is. Would it be possible for you to just indicate what kind of improvement in spreads could have been a little more structural from the mix side? That will be really helpful for me if you can try and give some broad numbers there. Hello?
Adarsh, thanks for the question. Adarsh, like we said, the NIM journey had two variables, assets plus liabilities. I think we're structurally on the right path of our NIM journey, and we've reported to you the sequential improvement on each of the parameters across assets and the quality of our liabilities. I think that's where we will leave it at the moment. It's very difficult to call out what is rate effect and what is structural effect at the moment. I think we are a running business, so I think we'll leave our response at that. All we say is all of our improvements are fundamental and structural, and therefore retention of the improvements will stay within the business.
Got it. Hello?
You have a
Yes. Second thing, Amitabh, is on the deal you said ends in March.
Sir, sorry to interrupt, but your voice is a bit muffled, sir. If you can, change the mode of connection, please.
Sorry. Let me try this, sir. I'll come back.
We are struggling to hear you. We are really struggling to hear you.
May we request you to rejoin the queue, please, by changing it?
Sure. Sure. I'll do that.
Thank you.
Thanks a lot.
Before we take the next question, a reminder to the participants, please limit your questions to two per participant. For any follow-up, may we request you to rejoin the queue. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Congratulations, Amitabh, Puneet and the entire team. Firstly, now, as you highlighted in terms of, Citi deal coming closer to an end, and maybe you highlighted in terms of the growth opportunities which are there and it's visible across the broad-based growth that we are seeing in this quarter. What would be the capital raising plans and when can we are we looking at something in the near term? That's the first question, yeah.
Maybe I think Adarsh Parasrampuria was trying to ask the same question, maybe using Citi's acquisition as a case. Adarsh Parasrampuria, if that was the question, I'll try to answer in detail. First, I'll make a couple of points here. One, if you look at our consumption of capital in the first six months of this year, our profitability has ensured that the consumption of capital is minimal, so we are at 13.14%. Post the Citi acquisition, which we are saying will happen in the, you know, Q1 of the calendar next calendar year, or if it gets delayed a little bit, maybe in the Q2 of the next calendar year, we will consume 177 basis points of capital.
The benchmarks we have set up internally give us enough cushion to ensure that we are not under any pressure whatsoever to raise capital even post the acquisition. We want to be sure, we want to bide our time, we want to be sure about the price at which we raise capital, if we want to raise it, because we want to ensure that the minority shareholder, the shareholder which are already there do not get diluted too much. Today, as we stand today, we have absolutely no intention, as we stand today, to raise capital at least till the Citi acquisition is done.
Even post that, we will, you know, obviously continue to evaluate various alternatives, including whether we need to raise capital at all or not, and then decide the right strategy depending on, you know, how we are doing, what consumption of our capital is for our running business at that point in time, how the market is, what the price is, and whether that timing would be right at that point in time or sometime later in the future. So I'm giving you, two answers. One is that we definitely don't see us raising capital up to a certain point in time, and beyond that also, we will let you know once we reach any conclusion in terms of timing, if any, at that point in time. Does that answer your question?
That answers the question. Secondly, when we look at it in terms of deposits, I think the action has been more on the wholesale deposit rates compared to that of retail for us. I think this repricing, given that MCLR and EBLR linked is higher, there will be further repricing which is gonna happen out there. We have seen this kind of improvement in the spread. Do we see raising the retail deposit rates and trying to garner more of retail deposits in the H2?
So-
The action has been relatively slower for us compared to other players here.
You know, we obviously I shared with you know, when I was asked a question earlier, some of the data points in terms of how our overall deposits have done. We are trying to solve many problems. We are obviously trying to solve for a franchise you know, issue in terms of how we are working and how the rigor and the rhythm is working within the overall retail franchise to ensure that we can grow the deposit at a certain rate. We are working to ensure that the share of premium deposit increases. We are trying to ensure that the outflow of the weighted average outflow is brought down. We are also trying to ensure the shift between you know, the RTD and NRTD. We are also at the same time trying to expand our franchise.
We are also trying at the same time, you know, there are a number of things which we are doing. The reason I'm telling you all this is, and this means that as the liquidity is sucked out of the system and as market evolves, we will be strategic and tactical at the same time. Now, will it include trying to raise retail term deposits to garner more deposits? I mean, it could. What we have seen in the past, increasing term deposits rates by a small amount does not have a real impact in terms of ability to raise more deposits. That ability to raise more deposits quickly is more on the wholesale side than on the retail side. Retail side is more, you know, daily tackling and pushing with the customers. The 5, 10, 15 basis point increase does not really make a huge impact.
That's what our experience is. Rather than saying this is exactly what we'll do, I've given you a sense for what are some of the things which we are working on. We also, by the way, are always, you know, we have, we promised to you that we'll work on our end. We have been working on it, and now we need to ensure that we keep it in the same zone. Given all those factors at play, if some tactical moves will help us in pushing the growth rate of the overall deposits, we will definitely look at it. Are we doing something of this nature at this point in time? No. We obviously keep all our options open.
Sure. Lastly, maybe during the call, if you can just share with respect to the Max Life, and maybe the IRDAI's order which was there, if you can just share in terms of how the dynamics or maybe the acquisition could get impacted. That would be great if you can make some comments outside of whatever has been filed with the SEBI.
No, no, happy to share. Max has applied for various approvals under the agreement which we have entered with them, when we became a promoter of Max Life. As part of the evaluation of that particular proposal, IRDAI has taken a view on the transactions we have undertaken. We are very clear that the transactions we have undertaken are part of two separate distinct agreements. We do believe that our legal position is strong. At the same time, we want to ensure that we work with the regulator rather than. In that spirit, you know, we will evaluate the order which has come and work with the regulator to ensure that we can move forward rather than getting caught up in the transactions we've done in the past.
We stay very committed to the partnership as a promoter and bancassurance. We stay very committed to continue to increase our stake to what we had signed up for. I do want to reiterate that we believe all rules and regulations have been followed through the deal process. I do want to end by saying that our idea is that because we have a pretty decent stake in Max, we intend to stay as a promoter for the longest period of time. We would like to work with the regulator and find the right solution rather than, you know, be at odds with the regulator in that process. Hopefully that gives you enough insight.
Yeah.
On the transaction.
Okay. Yeah. Thanks. Thanks. All the best.
Thank you.
A reminder to the participants, please limit your questions to two per participant. The next question is from the line of Jiten Doshi from Enam Asset Management. Please go ahead.
Yeah. Many, many congratulations, Amitabh, on an excellent result. I just want to find out your level of confidence in terms of the sustainability of this performance over the next three years as you plan the future cycles.
Jitin, thanks. You know, as I said earlier that our desire and our intention and whole execution has been around creating a sustainable franchise rather than trying to deliver things quarter on quarter. Yes, over the last seven, eight quarters, there have been some quarters where some metrics have not necessarily been in line with what the market expected. Our intent has always been to deliver consistency and stability and sustainability. So whatever metrics we are achieving, we do hope in the medium term we will continue to maintain or improve them. You know, I can't comment quarter on quarter, but that's the intent. That's the hope. That's what the entire management team is trying to execute on.
Are you reasonably confident that the foundation that you have built over the last 24 months is strong enough to get you where you want to go?
Well, Jiten, with your support, hopefully we'll get there.
Fantastic. I have no other question. many, many thanks and lots of congratulations to the entire team. Very, very well done. I think you'll have stayed the course with huge conviction. Keep it up. All the best to you.
Thank you. Thank you so much.
Thank you. The next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Hi, good evening. My questions have actually been asked, so congratulations for the quarter and all the best. Thanks a lot.
Thank you, Vijay.
Thanks, Amitabh.
Thank you. The next question is from the line of M. B. Mahesh from Kotak Securities. Please go ahead.
Hi. Thanks. Two questions on our side. One is, you know, the lack of growth in retail deposits, which seems to be an issue for the industry as a whole. Is there any reason that you could attribute to that? Are retail savings slowing down? What would you assume could be a possible reason for this?
Mahesh, you are right that ultimately, you know, the liquidity has been sucked out of the system, and it does have an impact on overall deposit growth. The numbers are quite visible. The credit growth is right now faster than the deposit growth. There is a scramble for deposits. Immediately in the same breath, I would say that our market share in deposits is 4.7%. Obviously we have to be worried about the macro and what is going on. We are very clear that there is a policy for us.
If we get our act right, if we get this, you know, this whole deposit franchise the way we want it to work, that, you know, even if the industry growth is impacted, we can and we should aim for, you know, continuing to push our deposit growth upwards. Let me just stop there and I'll ask Ravi here if he wants to add anything.
No, sorry. I just kind of follow. Probably just add to this. The question you're asking is that on one side, retail loans seems to be quite good, but retail deposit doesn't seem to be going that well. Why, how would you explain the dynamics that is working between both sides of the balance sheet for you and for the system as a whole? Sorry.
Yeah. Thanks for that question. I think as Amitabh said, this divergence is being seen after some time. The consumption pattern has gone up substantially in terms of how the individual households as well as small businesses are working through. Therefore, in terms of the outflows that we are seeing as an industry, you know, that is the fundamental shift that has happened. Whether you call it as you can see credit card spends going up, you can see consumption spending going up, you can see the cost of EMI is going up and therefore, that's the fundamental shift that has happened, you know, disruptively in the deposit space.
that you're assuming is flowing back into the system through corporate profits or in terms of higher corporate or wholesale deposits, is it?
Mahesh, I mean, we are continuing to work on building blocks, and it's not just about the retail deposits. I mean, the same thing applies on the wholesale side also. I talked a lot about what we're trying to do on transaction side of the business. I also talked a lot about how even on the retail side, we are trying to create customer journeys where customers.
Sure, sure.
Can actually just come and work. We are very focused on continuing to work on building blocks which will allow us to grow at a different pace in the medium to long term. We realize that there is a problem in the system in the short term, but you know, the message which we have given internally is our market share is where it is. We can definitely, you know, for us to grow at a certain rate, it is not very difficult. Should not be very difficult. But yes, it, you know, the whole culture, the rhythm, rigor and all is a work in progress. We are confident that with all the measures which we are taking over a period of time, we should be able to get there.
Perfect. Thanks. The second question is, one of the challenges that most of us have on this side of the market is that, the disconnect that you are, the banks in general are so confident about growth and asset quality and there is slowdown that seems to be there on the other side. But if you're not able to kind of connect the dots and come to a conclusion, how would you kind of respond, on this question?
No, M. B. Mahesh, you're asking a great question that, given what is happening on the macro globally, even in India to some extent, is there a possibility that the risk, or the overall, underwriting standards will be diluted or overall asset quality could deteriorate over a period of time? We are watching some of these numbers very, very closely. I think Axis has moved the needle in terms of asset quality it has created over the last three, four years. If you look at all our metrics, if you look at our 90 DPD, we believe we are best in class when we compare to some of the best franchises out there. We are not diluting our risk framework. We are watching our risk framework very, very closely. If required, I'll ask Amit Talgeri also to kind of add any comments which he has.
It's something which we are. I can only say this, we are watching that any deterioration of any kind very, very closely because you're making a very good point that if the world is going to go through what it seems to be going through, there are chances tomorrow that things could, you know, skip a little bit here in India and we don't want to get caught up in that scenario in many circumstances. Amit, you want to add?
No, I think, Amit, you added. Just one point is that the risk framework that we've built, we put in place thresholds for which we actually take risk action quite instantaneously. So at the first sign of trouble for any of the segments that we operate or locations or a profile, there will be immediate risk actions that we will take. That, those are frameworks that we've kind of built, right through the last 2-3 years, especially post-COVID.
Mahesh, the other thing that, I mean, if there are discontinuities in the, you know, sort of global economies as we go forward, maybe there will be some issues in terms of growth, and that is something that we should, we could potentially worry about as we go forward. But I think one of the things that you should also consider is that corporate balance sheets are in pristine shape. Debt equity is at, you know, 0.5-0.6 times. And so therefore, at least from the wholesale side, there's a great deal of comfort that, given the fact that I mean, the banking system at large has not done large-scale lending to the corporate sector over the last 3-5 years, and corporate balance sheets are in great shape.
The probability that you're going to see risk play out, very quickly in that space looks unlikely.
That's perfect, Rajiv Anand. The only worry this time we see almost all of you, all of the banks in general, is that the substantial risk that all of you guys are putting on the SMEs space, where the markers available for us to track seems to be exceptionally low. That's the only worry. Thanks for this.
I think, you know, as far as the SME side is concerned, the one thing that you should consider there is the fact that it's a granular business across multiple sectors, across multiple geographies. One of the things that you're trying to do is to ensure that you are diversifying risk as far as possible and ensuring that, you know, sort of the correlations between sectors is, I mean, we do track that and it is relatively low. Second is the collateralization that is available in this sector. Those are the two, I would argue, mitigants to the SME sector. There, once again, if you look at early delinquency numbers, et cetera, there doesn't seem to be anything to worry about at this stage.
Absolutely. Thanks a lot and congratulations for a great result.
Thank you. The next question is from the line of Ajit Kumar from Goldman Sachs. Please go ahead.
Good evening, everyone. Thanks for taking my question. Coming back again on the deposit side, what is driving this high CA growth in this quarter? 13% QoQ, that is one. While you have taken multiple steps to improve the liability side, as you have explained, can you guide in terms of timelines when we'll start seeing inflection in terms of deposit growth picking up as CD ratio is already 90%?
You heard Amitabh talk about the building blocks in place. You know, some of you are beginning to see some of the early wins on the current account side. We're winning significant mandates on cash management. We're winning significant mandates on our government businesses. We are winning significant mandates on the trade finance side as well. I think if you look at, you know, the market shares on NEFT, RTGS, GST, all those are going up, which really means that thanks to the technologies we've now put in place, increasingly customers are using our current account as a current account of choice. That is helping us build transaction balances and therefore CA balances.
I do believe that this growth here is sustainable.
Okay. There is no one-off here. I mean, it is going to be sustainable going forward as well in current account.
There will always be. It is a current account, so there will always be some lumpiness. That one-off lumpiness will always be there. I mean, it's not as if there's anything unique to this quarter.
Okay. Thank you. Thanks a lot.
Thank you. The next question is from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead.
Yeah, hi, Amitabh, Nitin Aggarwal team. Congratulations on great set of numbers. First question is around the margin line. Again, I mean, this quarter we have taken a big leap and covered what we did in the last quarter that it will take probably 8-10 quarters for us to reach, and now we have beaten that number. What has really changed? While positive surprises are always welcome, but I was just being curious to know, like, actually what has really changed to have driven such a big jump that we didn't really, like, indicate it in the last quarter?
Thank you for the question. I think, broadly, we've spoken about the multiple initiatives that the bank has been taking to create a robust platform, across multiple aspects to strengthen NIMs, both on the assets and liability side. The progress on each of those workstreams have delivered the current result. I'm happy that it is more positive than the outlook we provided, but it is brass tacks, hardcore banking that has delivered these numbers for the quarter.
Thank you.
Thanks.
Nitin, appreciate, Nitin, but I'll add something there that, you know, how the increase in reverse repo rate allowed us an opportunity to, you know, move on some of the fronts faster than what we had anticipated. I think given that the whole system was working towards improving NIMs, our ability to react and move on that, you know, move forward on that basis did help us. As Sunil very rightly pointed out, it is, you know, the whole system is very clear that we had to get the margin to the zone which we had been promising to you for some time.
Right. The second question is around on the business growth. Now while you have explained on the retail deposit part, but knowing that the CD ratio is now hitting close to 90, so do you think it can in a way limit the advances growth for the year? Because H1 has been relatively soft, and we are looking for a pickup in the H2. Can this come in the way of, let's say, achieving the advances growth in the H2?
First principle is that we obviously would like to do things whereby the NIM is.
In the same zone, we would not like to just sort of grossly again go down the path of showing growth and then sacrificing NIM in the process. Now assuming we can keep our mix intact, we can keep our NIMs intact. We do believe that there are sources of deposits out there which we can raise, which will allow us to manage that growth. You know, because there are a number of levers which are available to us. Obviously, in the long run, we want to build a you know, a franchise where the CASA ratio is higher than where it is. We obviously would like to ensure that the retail TD growth rate picks up. The penetration levels, which are right now lower in comparison to others, does pick up. Obviously we are working towards it.
in the short term, if there are deposits which come our way, we do have flexibility to, you know, raise that money for a reasonably long term quite quickly. We'll, you know, obviously capitalize on those deposits as they come along.
Sure. Thanks a lot. Wish you all the best.
Thank you.
Thank you. Ladies and gentlemen, due to time constraint, we take the last question from the line of Sameer Bhise from JM Financial. Please go ahead.
Yeah. Hi, thanks for the opportunity and congrats on a super quarter. Just looking at slide 19, I just wanted to understand the split on the retail savings balances. Could you kind of highlight what would be the approx range of salary balances within this split? And secondly, the 49% number is only Burgundy and Burgundy Private. Is that the right way to look at it?
Thank you for the question. I guess the slide 19 that you're referring to for the benefit of others is the customer pyramid that we publish. You want to know the balance across the customer pyramid from Easy to Burgundy Private. We do have.
Might not be so detailed, but some trajectory on where would what range would the CASA share be helpful.
Yeah. We don't disclose the salary share across the customer pyramid and, therefore that's not a number that we'd like to talk about. To your second question on premium, I would request you to look at the footnote on the same slide. Premium includes Burgundy Private, Burgundy Priority and Prestige NR/NRI segments, which we've called out specifically with that disclosure.
Okay. Sure. This is helpful. Congrats and all the best. Thank you.
Thank you. I would now like to hand the conference over to Mr. Puneet Sharma for closing comments. Over to you, sir.
Thank you, Steven. Thank you, ladies and gentlemen, for taking the time to speak with us. It's been a pleasure. If there are any other questions that we have not been able to answer, please feel free to reach out to Abhishek, who will try and answer them subsequently. Wishing you and your families a very happy Diwali and all the best for the season. Thank you and good night.
Thank you. Ladies and gentlemen, on behalf of Axis Bank, thank you for joining us, and you may now disconnect your lines. Thank you.