Ladies and gentlemen, good day, welcome to Axis Bank Conference Call to discuss the Q4 FY2023 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 sent. Unauthorized dissemination of the contents or the proceedings of the call is strictly prohibited. Prior expressive 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 after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then 0 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 and CEO, and Mr. Puneet Sharma, CFO. I now hand the conference over to Mr. Amitabh Chaudhry. Thank you. 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 at 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 checked the boxes on growth, profitability and sustainability over the past year into financial year 2024. We continue to stay on course on three core areas of execution of our GPS strategy, namely, starting the first one, embedding a 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 seven months after the CCI's approval. To that effect, we have taken non-recurring one-time charges reported as exceptional items, details of which would be provided by Puneet subsequently.
Our consolidated annualized ROE, excluding exceptional items for quarter four financial year 2023, 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 exceptional items, of 18.84% on a full year basis. Let me highlight the key trends for quarter four. Net interest income grew by 33% year-on-year and 2% quarter-on-quarter. Net interest margins improved 73 basis points year-on-year. Core operating profit grew by 46% year-on-year and 3% quarter-on-quarter. Profit after tax, excluding exceptional items, stood at INR 6,625 crores, which was up 61% year-on-year and 13% quarter-on-quarter. Point number two, we lifted 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. 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 curve growth trend that we feel confident will sustain. In credit cards, we were amongst the largest issuer on net basis. Our card issuances for quarter four financial year 2023 stood at new quarterly highs of 1.13 million, taking the full year financial year 2023 card issuances to 4.2 million, up 8% year-on-year.
We gained significant incremental market share of 26% in financial year 2023 in merchant acquiring business. We launched Digital Dukaan, a comprehensive digital offering for the merchant community. We are now ranked number two in the NEFT volumes, market share, it was up from fourth. Customer acquisition and deposit quality. Our customer acquisition remains strong. In quarter four, 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 open in financial year 2023 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 levels acquired and 30% year-on-year growth in salary accounts acquisitions in financial year 2023.
Our premiumization strategy and the recent acquisition of 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 lowered by 550 basis points on a year-on-year basis. Obviously, this is a result of a lot of hard work done in this area. We have also seen all-round growth across businesses, market leading growth in our focus segments. Retail disbursements 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 69 basis points in last 3 years. Those six corporate loans grew 24% year-on-year and 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 2024.
The third pillar in the ensuring that we improve the embedded performance-driven culture was fostering a winning mindset. We are doing more, and this is reflected in multiple external recognitions we received this quarter. NEO, possibly the most advanced 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 Suite and the best BFSI MSME support award for NEO Connect with prestigious during Dun & Bradstreet BFSI and Fintech Summit 2023. Project NEO also won the ET BFSI Excellence Awards for Customer Engagement Initiative of the Year. We were ranked in the top 10 of the Kincentric Best Employers in India survey. We were certified a great place to work for a second consecutive year.
Business Today has recognized us as the top seven best companies to work for owing to our employee-friendly policies. These accolades demonstrate the impact of investment we have made on 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 provision 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 2023. We are building the next-generation technology architecture for wholesale digital banking. I've spoken a bit about NEO already.
Let me give some color on it. The outcomes in financial year 23 demonstrate 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. In financial year 2024, 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 number one-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're 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%-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-on-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 from strength.
Bharat Banking engine is humming with disbursements growing by 37%, books by 36%, and deposits by 15% in financial year 2023. The distribution footprint has been expanded to 2,137 Bharat Banking branches, complemented by the 60,000+ CSC daily 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 five 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 observation program, is making an impact on our customer experience scores.
We started the Sparsh build-out from branches and wealth management segment of Burgundy. In the last 12 months, Sparsh has now been taken to all our service touchpoints, all products and segments in liabilities, cards and payments, and to the commercial banking group. This is a multi-year journey. 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 continues to reflect in robust performance of our subsidiaries. The total financial year 2023 PAT of our domestic subsidiaries stood at INR 1,304 crores.
Having scaled up the business significantly in the last four 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 India 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 from the Citibank customer base has been quite positive, and that is reflected through deposits from this customer set growing by 4% since 31st January 2023. In the past few 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 initial locations of Axis, where Citi was either too not present. We have already started incremental onboarding on Axis Bank platform. There is strong interest from our side, Citi, so with our 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+ synergy initiatives in this quarter itself, identified across business units as we look to drive revenue and cost benefits. In closing, in the last three years, we have strengthened our balance sheet and lifted the key operating matrix significantly.
We are well-positioned to take advantage of the trends that are emerging in India, the China Plus One, [MSME] possibly, the next-gen public data 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 of our cities, Indian economy. We remain watchful over consumer demand in 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 FY2023 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 FY2023 and Q4 FY2023, focusing on our operating performance, capital and liquidity position, growth across our deposit and loan franchise, asset quality, restructuring and provisioning. The bank is the legal owner of Citibank India consumer business effective March 1, 2023, hence our reported numbers for FY2023 and Q4 FY2023 are not strictly comparable with respective prior periods.
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. Number three, the stamp duty on acquisitions. These are non-recurring and one time and have been charged to the P&L in Q4 FY 2023 and reported as exceptional items. Details are provided by way of note five to the published ASR. I would also request you to please refer 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 FY2023, our operating performance was strong across NIMs, fee costs and credit lines. For full FY2023 on a reported basis, NIM stands at 4.02%, improving 55 basis points YoY. NII stands at INR 42,946 crores, a YoY growth of 30%. Fee stands at INR 16,216 crores, YoY growth of 25%. Granularity at 93% of total fee. Core operating performance stands at INR 32,291 crores, YoY growth of 40%. Cost to assets at 2.25%, increasing 8 basis points YoY. Cost to income, excluding exceptional items, stands at 46.1%, improving 134 basis points YoY. Credit costs at 40 basis points, declined 32 basis points YoY. PAT excluding exceptional items is INR 21,933 crores, increasing 68% YoY.
Net NPA at March 2023 was 0.39%, declining 34 basis points YoY. Gross NPA at March 2023 was 2.02%, declining 80 basis points YoY. PCR stands at 81%, improving 613 basis points YoY. Our standard asset cover, which is all non-NPA provisions by standard assets, stands at 1.42%. All provisions, standard, non-standard, others by GNPA gives us a ratio of 145%, improving 13.29% on a YoY basis. Consolidated ROA excluding exceptional items at 1.82%, improving 53 basis points YoY. Consolidated ROE 18.84% above our aspirational ROE, improving 517 basis points YoY.
The CET1 efficient net of organic consumption, excluding exceptional items, was 69 basis points. For Q4 FY 2023 are reported, on a reported basis, NII stood at INR 11,742 crores, growing 33% YoY, 2% QoQ. NIM for Q4 FY 2023 stood at 4.22%, growing 73 basis points YoY. 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 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 one-time interest recovery on restructuring of an existing NPA account aggregating INR 149 crores, contributing 5 basis points to the previous quarter's NIM.
As previously indicated, we saw an increase in deposit costs in Q4 FY2023. We expect deposit costs to increase further in Q1 FY2024. We have a cushion of approximately 40 basis points over our guided structural NIMs through cycle. Our endeavor will be to retain as much as possible of the said cushion. We have 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 comprise 86% of total assets at March 2023, improving 242 basis points YoY. INR denominated loans comprise 95% of total advances at March 2023, improving 340 basis points YoY. Retail and CBG advances comprise 69% of total advances at March 2023, improving 150 basis points YoY.
Low yielding RIDF bonds declined by INR 11,089 crore year-over-year. RIDFs comprise 2.3% of our total assets at March 2023 compared to 3.5% at March 2022. We are PSL compliant across all sub-segments and at a headline level for FY 2023. Composition of liabilities measured through average CASA ratio improved 56 basis points year-over-year. Quality of liabilities measured by outflow rate improved 550 basis points year-over-year. We had strong all-round fee performance for the quarter. Our fee income stood at INR 4,676 crore, growing 24% YoY, 14% QoQ. Total retail fee grew 31% YoY and 14% QoQ. Fee on retail cards grew 50% YoY, 9% QoQ. Fees from retail loans grew 22% YoY, 12% QoQ.
Fees on retail foreign exchange and remittances grew 25% YoY and 22% QoQ. Wholesale lending fees grew 27% QoQ, and treasury fee grew 25% QoQ. Trading profit for the quarter stood at INR 83 crore compared to a profit of INR 428 crore in the previous quarter and INR 231 crore for the same quarter last year. Operating expenses for the quarter stood at INR 7,470 crore, growing 14% YoY and 9% sequentially. The YoY increase in INR 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 expense grew 27% YoY and constituted 8.7% of total operating expenses.
Staff costs increased 15% YoY and declined 5% QoQ. 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 attributable to a true-up provision for variable pay accrued in previous quarters of the current year, no longer required. We continue to hold social security core provisions aggregating to INR 28 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 2023.
Operating expenses to average assets stood at 2.25%, higher by 8 basis points YoY and 1 basis point sequentially. We remain committed to consciously investing in our focus segments. The lower credit costs over the past few quarters has provided some headroom to run operating costs at slightly elevated levels. 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 FY2023 is INR 9,168 crores, increasing 42% YoY. Core operating profit, INR 9,084 crores, growing 46% YoY, 3% quarter-on-quarter.
Provisions and contingencies for the quarter were INR 306 crores, declining 59% YoY, 79% QoQ. The bank has not utilized any of its COVID provisions during the quarter. This provision is entirely prudent. Annualized credit cost for Q4 FY2023 is 22 basis points, declined 10 basis points YoY and 43 basis points QoQ. Profit after tax, excluding exceptional items, INR 6,625 crores, growing 61% YoY, 13% quarter-on-quarter. Consolidated ROA annualized excluding exceptional items for Q4 stood at 2.18%, including 64 basis points YoY, 18 basis points QoQ. Subsidies contributed 8 basis points in the quarter. Consolidated ROE annualized excluding exceptional items for Q4 FY2022 stood at 21.58%, improving 500 basis points YoY and 177 basis points QoQ. Subsidies contribute 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 include unsecured retail at 100% rates and the rest asset classes at first bucket NPA rates. Standard asset provision is higher than regulatory rates of INR 2,276 crores, weak assets and other provisions 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 for FY 2023. 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 FY2022. Our total capital adequacy, including profits but after proposed dividend for FY2023, 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 slides 33 and 34 for details around the quality of our liability franchise and slides on our loan franchise. Our CASA ratio on an NEB basis was 47%, improving 215 basis points YoY, 261 basis points QoQ. 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 MCLR repricing frequencies set out on slide 25 of investor presentation. Moving to our retail book.
Retail advances grew 22% YoY and 14% sequentially. 78% of the book is secured. Unsecured disbursements for the quarter constituted 20% of the total disbursement. Q4 FY2023 retail disbursements for home loans grew 43% quarter-on-quarter. Rural disbursements grew 56% quarter-on-quarter. Small business financing disbursements grew 57% quarter-on-quarter. Personal loan disbursements were up 20% quarter-on-quarter. Cards and PL portfolio grew 97% YoY and 21% YoY respectively. The credit card spends for Q4 FY2023 grew 57% YoY 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 on slide 49. The corporate loan book grew 14% YoY 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 Gift City branch, is India linked, and 92% is A-, rated A- in the past. The commercial banking book grew 23% YoY and 13% sequentially. The quality of the CBG franchise we are building and the strong relationship lender source is reflected through our CBG current account balances on a QAB basis growing 13% YoY. 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 slide 76 to 82 of the investor presentation. The domestic subsidiaries reported a total annualized net profit of INR 1,304 crores.
This translates into a return on investment for the bank at 50%. Axis Finance delivered strong growth as a full service customer-focused franchise, offering retail as well as wholesale banking solutions. In FY2023, overall AUM grew 35% YoY. Retail book grew 67% YoY and now constitutes 41% of the total loans, up from 17% two years ago. PAT grew 30% on a YoY basis to INR 4,475 crores, ROE at 17.9% and a 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 FY2023 PAT grew 16% YoY to INR 415 crores. Axis Capital PAT stood at INR 142 crores.
Axis Securities new client additions were up 28% YoY. Broking revenues were up 9% YoY and PAT stood at INR 203 crores. Asset quality restructuring and provisioning. The slipped GNPA, NNPA and PCR ratios of the bank. Segmentally for retail, CBG 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. Recovery 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 - INR 980 crores.
Reported gross slippages for the quarter, including one-time day one impact of Citibank India Consumer Business, was INR 3,375 crores, lower 15% YoY and 11% quarter-on-quarter. For the quarter, 35% of the reported gross slippages are attributed to linked accounts of borrowers which were standard when classified or had been upgraded in the same quarter. Reported net slippages for the quarter were INR 676 crores, of which retail was INR 1,179 crores, CBG at INR 112 crores and WBCG, which is the wholesale bank, at a -INR 615. Details of the double-digit below pool and restructuring have been provided on slide 19 of our investor presentation. Banks are required to report the digital banking segment as a sub-segment within the existing retail banking segment 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 its 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 gross customer advances.
Consistent delivery across our key initiatives and disciplined execution in our focus segments has resulted in our consolidated ROE for the quarter standing at 21.58%, improving 500 basis points YoY and 177 basis points Q o Q. We've delivered above our aspirational consolidated ROE target for the full year 2023. Our liability improvement journey is progressing well with our Q4 QAB and MED CASA at 44% and 47% respectively, improving 80 basis points and 215 basis points respectively on a YoY basis. The liability franchise is getting granular. Reduction in outflow rate gives us comfort that we've laid a strong foundation. Improvements planned over the next eight to nine 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 funds, regulatory policy action and its impact on our business and clients' businesses. Thank you. We will be glad to take your questions now.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their customer telephone. If you wish to remove yourself from the question queue, you may press star and two. 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 Nuvama. Please go ahead.
Yeah, hi. My first question is that this would include one month of Citi's income, right? I mean, Citi's PNL or...
Thank you, Mahrukh, for the question. Yes, it would include the Citi PNL for the month of March.
Okay. My other two questions are firstly on OpEx. Basically, you've given a breakup in the notes to accounts of INR 5 billion, you know, for provisions and for OpEx on harmonization. That is part of the INR 20 billion or INR 15 billion Citi-related OpEx over two years that you had pointed out?
No, Mahrukh. I think what we've given in the ASR note five is the cumulative exceptional items of INR 12,489 crores.
Mm.
-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 does not include integration expenses. Integration expenses are recurring. Integration expenses are therefore sitting in the operating expenses line on a reported basis this quarter.
Got it. My last question is just for out. I know that you said that you will 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? Also how that translates into branch expansion.
Because the DBS 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?
Thanks, Mahrukh. We don't give guidance for next year. I think what we've consistently maintained right 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 are already seeing that the credit growth has come off a little bit. Our projection for next year on the credit side is 12-13%, and our deposit growth is expected to remain in the same zone as where it is today. You know, the numbers speak for themselves. This potentially is not sustainable over long periods of time, that your deposit growth is lower than the credit growth.
As I said, we maintain the stance that we'll be able to grow at a certain rate. Your second question was around.
Branches.
Branches. Thanks a lot, sir. As far as branches are concerned, I think we have maintained a pretty consistent stand, that we believe that the combination of opening new branches, our mobile app, which for us is the largest brand for us, the fact that we have, you know, these business correspondent relationships, the fact that we expanded our weekly 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 would be 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 move forward. Yes, it's 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. If there is a change in that strategy, we'll obviously let you know.
Okay, thanks a lot. Thank you.
Thank you. Next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Yeah. Hi. Thanks for taking the question. My question was with respect to yields, and on calculated basis, despite whatever you have mentioned with respect to increasing retail plus SME, and maybe the lending profile which we have, still there is not much of a increase on a quarter-on-quarter basis on yields. One is in terms of the excess liquidity, but what could be the other reason for that, yeah?
Kunal, principally, what I said earlier. Thank you for your question. What I clearly called out earlier for your consideration is there is a six basis points impact on net interest margin because of the 13% average LCR.
Yeah.
Higher average LCR maintained through the quarter. That effectively should explain any bridge that you're trying to work through.
Okay. Ideally with this lending profile, in fact, yield expansion should have been higher on a quarter-on-quarter basis, maybe 6+, no improvement on a calculated basis. That still seems to be suggest a slightly lower number, yeah.
Kunal, I think, instead of specifically getting into the computation you're 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. Overall, we feel comfortable with the loan rates that we're currently running at for the book mix that we have.
Okay. Any reason for running this excess SLR at 129%, maybe at LCR at 129 and excess SLR at INR 75,000 crore?
If you look at the historical LCR that we have maintained, it has been in the region of 116%-121%. This quarter was 129%.
Yeah.
About 8% extra. Part of this is explained by the fact that we had to pay for Citibank acquisition of about 10,000 crores for which we were carrying excess security. Partly, we had a much better outcome on cash flow side, depending on a basis for the transaction banking related flows that we received. That resulted in a much higher balances in current account and much higher holdings in government bonds. Both of these have contributed towards this increase in the LCR of 129%. I think it will normalize over the next two quarters.
Okay. Okay. Last question is on write-off being higher. Is there anything to do with the acquired Citi portfolio? Because GNPAs are given separately, but any impact of Citi on write-off?
Kunal, the entire Citi portfolio is retail led. 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, there would be limited to no impact of the Citi portfolio on our rule-based write-off.
Okay. INR 2,400 crores is entirely Axis Bank standalone.
Across all three segments.
Yeah. Okay. Thank you.
Thank you. Next question is from the line of Adarsh from CLSA. Please go ahead.
Hello. Yeah. Hi, Amitabh Team. Congrats.
First is on OpEx. you know, just wanted to understand as you get into 2024, your, you know, you'll have a full year of, higher OpEx business costs running in new line branches as well. you know, overall the cost to asset of, acquired Citi Business would be more. just wanted to understand, do you wanna recalibrate your guidance of 2%, or you think over a three, four-year period you'll get there?
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 an, a broad sense of what our cost to assets for [Q4] is, which is 2.25%. 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 books taken over. 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 FY2025.
We will work hard towards normalizing the number, very clearly, the Citi Business is entirely a retail business. Retail business is run at higher cost ratios, and therefore, there should be a recalibration in all our minds to where [NIM] should land at. That's broadly how I would respond to your question. We've also said that against FY20 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.
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?
It includes both. This is the best estimate that we have, currently.
Got it. second thing is on margins. let's say we are at 420-ish with some liquidity buffer. we'll get into the next two to four quarters where cost of fund will catch up with yields which had moved up earlier. just wanted to understand, you know, we had earlier indicated a margin band. We had some fundamental improvement in our business also. what's your comfort zone on margin looking like if I look, you know, if I wanna look 12 months out?
Adarsh, I think we stick by the fact that we don't guide what absolute margins are. Let me present a framework that may help think through the issue. FY2023 full year we've called out is 4.02%. We started on a low number, we ended on a higher number. We report on a quarterly basis, the numbers exist. Our Q4 annualize is 4.22%. At a full year FY2023 NIM of 4.42%, 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 points cushion over the structured NIM guidance that we have.
We will continue to work on the five initiatives that I have spoken to you about on improving our net interest margins. Yes, there will be a lag effect as deposit costs increase. We will maintain or endeavor to maintain as part of the cushion that we have built for a sustainable period. We do not guide a specific outlook for 12-month margins ahead.
I'll just to supplement what Puneet said, and he said it, but I just wanna emphasize it. You know, 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 five 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're 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. We know some things are working against us very clearly.
Got it. This is helpful. Thanks, Puneet, and thanks, Amitabh.
Thank you. The next question is from the line of Abhishek from HSBC. Please go ahead.
Hello?
Go ahead, you're audible.
Hello? Yeah.
Hi, Abhishek. How are you? Thank you.
Hi. Hi. How are you? Just a question on, 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. 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 reduction in outflow rates. As Amitabh called out in his opening remarks, our outflow rates on a Basel basis, reported basis are down by about 550 basis points. 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. Thanks for that. 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, you know, it has become increasingly difficult to pass on yields? You know, your loan mix has moved favorably in the last four to five quarters due to all the efforts that you've taken, but the yield is not reflecting a commensurate increase. Is there any, you know, sector where you're finding it difficult to pass on the rates or any comment there would be helpful?
No. 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%-4.2%. Partly obviously, you know, one of the reasons I'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 in comparison to some of the others because we pushed through some of these changes faster than some of the others. It can't be timed exactly as maybe someone you might be comparing us to. As far as generally the overall business is concerned, we don't, you know, give some guidance on where the yields are falling, where the yields are up.
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. As far as some of the other sectors are concerned, depending on which bank wants to drive growth in which quarter. We do sometimes see competition intensity, which is more than what we anticipated. That happens in the market all the time. We are on a particular track. We have a certain strategy.
We, as I just mentioned in the answer to the previous question, one would like to ensure that we remain at a certain level, and we'll be very disciplined about maintaining some of those matrices at those levels, because we've worked very hard over the last six to eight quarters to get them there. As I said, as we believe the platform which we have allows us to maintain the matrix at those levels. I'm not giving you a very specific answer, but I think you need to understand the sense of what we're trying to do in Axis Bank.
Sure, sure. Thanks, thanks for that. Just one quick question on fee growth. The sequential movements have been very, you know, very strong. How much of that is durable and how much would you attribute to a, let's say, year-end effect? Typically, you know, March would have a bunched up effect.
Well, everything we are doing in Axis is to trying to build a granular business. Nothing is being driven one-off, one time or pushing it towards, you know, 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. Otherwise, please understand and appreciate the entire drive over the last three and a half, four years is to get everything granular so that we can repeat, you know, our numbers quarter on quarter on predictable basis. As I said, you know, 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 these one-off things, you don't create an institution of this nature. Long answer, but please assume things are granular.
Sure, sure. Thank you so much, Amitabh. Thanks a lot. All the best.
Thank you. Next question is from the line of Saurabh from JP Morgan. Please go ahead.
Hi, good evening. Just three questions. One is just on the sustainability of this credit cost. If you look at your recovery upgrade momentum is very high, you know, almost 7.5% at this level years. how would.
Saurabh, sorry to interrupt you. We lost your audio in between. May I request you to come in a better reception area, please?
Is this better now?
Yes. Thank you.
Okay. Just, firstly on this, sustainability of this credit cost. Recovery upgrade momentum is quite high this year. How should we think about it, you know, going into next year? Would we expect this momentum to start moderating, and basically, you know, just, how we think about your credit cost for next year? The second is, can you help with 1 month PPOP and profit of the Citi portfolio? Lastly, in terms of Axis Finance, the growth is very high. I do not know if it is building up a retail business of a low base. What kind of, you know, customer segments or retail business is being done there? These are three ones. Thank you.
So-
Axis Finance growth.
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 LAP. They are into business loans, and I think they have built 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. 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 it's one of the fastest growing NBFCs, if you look at in terms of their growth and profitability in a 10-year history. We are, we're very, very happy with what they have achieved.
Yes. On the credit cost side, before Puneet kind of jumps 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.
First is that somewhere we need to be, you know, start getting rewarded for the fact that the asset quality has moved so well, so the credit costs have gone down. 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 which has happened in such a significant manner for Axis Bank will, over a period of time, hopefully reflect consistent lower credit costs in comparison to competition out there, because that's exactly what we have done. Puneet.
Fully agree with Amitabh. Sir, thanks for the question. Broadly, the upgrades and recoveries are reflective on the net credit cost number. 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 franchise has clearly improved. The last question that you had was Citi PPOP for 1 month. We are operating Citibank India Consumer Business and Axis Bank as one bank, and therefore we will report as such. We don't intend to report Citi independently on a consolidated basis. That's the number that we will come out.
Okay.
Okay. Thank you.
Thank you. Next question is from the line of Hardik Shah from Goldman Sachs. Please go ahead.
Thanks, and good evening, Puneet and Amitabh and team. You know, circling back to the ease point to Amitabh, what you said, you know, the delta that you've seen may have been ahead of others.
Hardik, can you just speak a bit louder?-
Yeah. Is it any better?
Just speak loudly a little bit Hardik. If you could just.
Is it better?
Yeah, perfect. Yeah.
Okay. I was just circling back to the ease point. Amitabh, you said you've got the delta maybe slightly ahead of, you know, what others may have got. Keeping in mind the loan book mix that you've got, which has MCLR and even some of the fixed fee trade portfolio as that is getting repriced at a, you know, higher rates. Do you, do you reckon that, you know, despite all of it, we have now started reversing the yields? I mean, are we going back on this phase on the cycle, given whatever the competition that you talked about? We still have some room available to kind of, you know, maintain or push up this number?
Again, let me first start by saying we don't give any guidance.
No, no, it's not about. I'm just trying to understand.
Yeah.
the drift of it. Yeah. Mm.
I'm trying to answer.
Sure, sure.
giving a percentage. 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 five factors at play where there is still some scope left to continue to push for, you know, improving our overall loans. Over and above that, if you look at within retail and wholesale, the growth, for example, if you look combined, the mid-corporate, the what we call the CBG and the business banking segment that continues to have seen a pretty meaningful increase in overall share in our overall earning assets. You know, 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. We, while not giving a guidance, we are trying to say that we have factors working on both the sides. Let's see where we end up. We'll continue to strive hard to ensure that our metrics continue to reflect all the hard work we have done. We're also helped 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, you know, trajectory, now that the integration may be going on in full swing. You know, how should we think about how the growth will look like over the next couple of quarters? When do we expect, you know, some delta to start, you know, reflecting from the Citi customers in the portfolios, where they are significant?
We have, taken it over as of March 1st. That's when we really got an idea.
Yeah.
We did not have any data before that, where we got an idea of the customers. As we said, the senior management team has been visiting some of these customers and getting a sense for what their policies out there are. We have also mentioned that we saw 60+ synergy kind of initiatives which could be undertaken by Axis for the combination. I also mentioned that 20+ synergy initiatives are already in play in the first quarter. The synergy benefits are obviously around three things. They are around deposits, they are around revenues and expenses. These things will play out through the year, and beyond, because we're also, please understand, appreciate going through the transition to LD2 when all the systems, all the cards, every technology will be onboarded onto the Axis platform.
While changing the wheels of the car, we are obviously pushing through the synergy benefits. There's a separate team which is working on it. There is a team of senior managing people who are in charge of ensuring that the synergy benefits are delivered. If you are expecting uplift, you should start expecting uplift, you know, coming through from the second quarter onwards. We're not guiding on what that uplift would be. I'm just telling you that the work is going on as we speak.
Got it. Just one final question maybe to Puneet. You know, 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 crore over the next 18 months, that you have alluded to a couple of times.
Yes, [Rahul], all one-time costs with respect to.
Sure.
Purchases have been dealt with. The INR 1,500 crores is for stacks.
Yeah.
To be incurred over an 18-month period. That's absolutely correct.
Sure. Very helpful. Thank you so much. Wish you all good luck.
Thank you. Next question is from the line of M.B. Mahesh from Kotak Securities. Please go ahead.
Hey. Hi, Puneet. Sorry, I too will 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 the housing yields reflecting the book at which you are carrying today, and also for the credit card book, and also on the on the deposit side?
Mahesh, thanks for the question. Didn't fully catch it. Could you just help me with that question again, please?
We just don't know at what yields were the portfolio acquired at. When you compare that book with yours, is there room for an improvement, or would you see some pain as we go forward? When you look at the overall portfolio, both from a housing yield side, the kind of credit card book that they're carrying, as well as the 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. Of that book, on a pro forma disclosure basis that we did on January, INR 9,000 odd crores was credit cards and the balance was mortgages, auto CVC . First and foremost, on a cumulative number basis, will this move the yield insofar as the non-cards business is on Axis book yield? 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. 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, 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, and this was going through the banking crisis. I think things have improved a little bit, though again, we don't know. You know what is going on in U.S. as we speak. I think the more the macro remains volatile and in a volatile environment to say everything is gonna be gung ho and things are gonna all look up and nothing else can happen, I think would be a foolhardy on our part.
What we're really saying is, on one side, we have a platform which can capitalize all the bounty that comes our way, and we will grow at a certain rate above the industry. 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 recognize 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 as the things were to turn 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 suddenly were to rise, we could have potentially a problem in terms of how the risks could play out.
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 are not seeing a slowdown. I think our numbers in this quarter very clearly reflect that the growth in all our asset classes has done extremely well. Even on the deposit side, I think we compared quite well to some of our peer banks, and we will continue to strive for it. Macro remains volatile, and we are very watchful. That's all I meant.
Perfect. Thanks. That's understandable. Thanks for this.
Thank you. The next question is from the line of Sumit from Morgan Stanley. Please go ahead. Sumit, may I request you unmute your line from your side and go ahead with your question, please.
Hello. Am I audible?
Yes. Sorry, your voice is breaking. Sorry to interrupt you, Sumit. May I request you to rejoin the queue once again? Your voice is breaking.
Okay. Yeah.
The next question is from the line of Jai Mundhra from ICICI S ecurities. Please go ahead.+
Yeah. Hi. Good afternoon and good evening, sir, and thanks for the additional disclosure. I had a question on loan growth. While I understand that we don't give guidance, and we have this stated aim of growing 400-600 basis point ahead of the industry. For FY2023, if I exclude Citi, then we are very close to the industry. This year probably we had the one of the best tailwinds for NIMs. I wanted to check as to what were the 2, 3 key constraint which limited our loan growth to similar to industry level and to what extent you think they have been addressed.
If you look at our numbers for the year and I'll ask Puneet to supplement, you, our growth rate on the wholesale side was quite muted for the first three quarters because very calibrated way 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 were coming our way. We've been stating that quite consistently in the first three quarters. We saw the pricing kind of opening up. You saw that in the third quarter we showed some growth on the wholesale side, and the fourth quarter has shown even more healthy growth. For me, a large part of our book did not grow that much in the first two quarters and was 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. It did not make sense to us. As things have stabilized, I think we've demonstrated very clearly in this quarter that we can grow faster than the industry. As we've always said, you can't deliver 400-600 every year.
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. That's in a nutshell, kind of a long-winded answer to your question.
Sure. Last, second and last question is, sir, if you can talk about the pricing in your fixed rate book, right? Over the last 12 months, repo rate and EBLR-linked products would have seen a 250 basis point upward revision. I think MCLR-linked book would have also seen a 150+ kind of an upward revision. What kind of an upward revision in the yield would have happened for fixed rate book? You know, 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. 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'll respond to it in part, in part, obviously, we don't disclose it is what is the yield on fixed rate book. The part that I would request you to consider is something I said earlier in the conversation. 42% of my 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 market space. We are very confident that we are not underpricing ourselves to competition, therefore, bookies should get captured.
All right. Sir, okay. If you can specify, sir, a fair range or maybe broad range, within which the fixed rate book would have repriced, at least on incremental basis. Just to understand that if this 40% book gets repriced, then what kind of a yield impact one could see, if possible?
Jai, I'm sorry, we don't put that number outside. I actually wouldn't respond to that.
Sorry to interrupt you, Jai. I'll request to join the queue for a follow-up question. Next question is from the line of Anand Dama from Emkay Global. Please go ahead.
Yes, sir. Thank you for the opportunity. When we look at our SME book, that's been growing at a pretty faster pace. This quarter we have grown almost 13% quarter-on-quarter. What is basically driving the growth? Which are the segments where we are growing? Have we increased the yields on this portfolio in line with the increase in the reference?
Point one is that growth in the segment over the last 18-24 months has been strong and continues to be so. The portfolio is very well diversified across sectors and geographically. We also manage 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. Therefore, you know, the impact of higher rates as it of the repo rate increases have been passed on.
We have fully passed on the rate hikes or like, there has been some back and forth like, you know, the customer comes back and basically reduce the rate or there is competition as well, which basically leads to some kind of, you know, cut-off in the rates.
They've been fully passed on.
Secondly, this question is to Amitabh. Particularly on the corporate growth front. As you said that last year, you know, there were some issues in terms of corporate growth, but how do you see the corporate trades are picking up this year? Can you provide some outlook on that?
We are seeing demand on the corporate side across multiple sectors, for example, in iron and steel, commercial real estate, infra roads, and NBFCs. 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. Demand continues to be strong across multiple sectors.
Thank you. Participants, you may press star and one to ask a question. Ladies and gentlemen, you may press star and one to ask a question. [Samay Vardu].
Yes, Neerav, you are.
Ladies and gentlemen, we'll take that as our 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 up 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.