Axis Bank Limited: history, ownership, mission, how it works & makes money

A Brief History of Axis Bank Limited

Axis Bank Limited, one of India's leading private sector banks, was established in 1993 as UTI Bank. The bank was formed as a result of a partnership between the Unit Trust of India (UTI), Life Insurance Corporation of India (LIC), and several other financial institutions.

In 2007, the bank rebranded itself as Axis Bank, moving beyond its original associations and positioning itself as a universal bank. This shift was accompanied by a significant expansion strategy, focusing on retail and corporate banking, as well as international operations.

As of March 2023, Axis Bank reported a total income of ₹ 73,480.40 crore, reflecting a growth of approximately 15.7% year-on-year. The bank's net profit for the same period reached ₹ 25,097 crore, marking a remarkable increase of 30.1% over the previous year.

Axis Bank has a robust presence with over 4,600 branches and more than 12,000 ATMs across India. The bank also has a significant international footprint, with branches in New York, London, Singapore, Hong Kong, and Dubai.

Axis Bank has been consistently recognized for its operational efficiency and innovation in banking services. The bank reported a capital adequacy ratio of 18.52%, well above the regulatory requirement of 11.5%.

In terms of asset quality, as of March 2023, the bank's gross non-performing asset (GNPA) ratio stood at 2.04%, reflecting a significant improvement and indicating effective risk management policies.

The bank has also made notable strides in digital banking, with over 61% of its savings accounts now being opened through digital channels, showcasing its commitment to technology-driven banking solutions.

In recent years, Axis Bank has been involved in several strategic acquisitions to enhance its product offerings and market position. Notably, the acquisition of a majority stake in Freecharge in 2020 expanded its footprint in the digital payments space.

The bank's strong focus on retail banking has led to an increase in retail loan disbursement, which accounted for approximately 59% of the overall loan book as of March 2023.

As part of its corporate social responsibility initiatives, Axis Bank has invested significantly in various social projects, including health, education, and environment sustainability. The bank allocated around ₹ 467 crore towards CSR activities in the financial year 2022-23.

Overall, Axis Bank's journey from UTI Bank to a major private sector player reflects its adaptive strategies, focus on growth, and commitment to meeting the evolving needs of its customer base.

A Who Owns Axis Bank Limited

Axis Bank Limited, one of India's leading private sector banks, has a diverse ownership structure comprising various institutional and individual shareholders. As of the latest available data, the shareholding pattern is as follows:

Promoter ownership mainly belongs to the Axis Bank Foundation and the parent company, UTI Trustee Company Pvt Ltd, which together hold a significant portion of shares. The bank witnessed a gradual increase in foreign institutional investment, reflecting growing international confidence in its operations.

As per the latest data from September 2023, the top shareholders include:

In total, Axis Bank had an outstanding share capital of approximately ₹ 65,000 crores (about USD 8 billion). Over the past few years, Axis Bank has seen a steady rise in its market capitalization, reaching approximately ₹ 2.34 trillion as of early October 2023.

The bank’s strong performance reflects in its financial metrics as well. Axis Bank reported a net profit of ₹ 6,100 crore for the fiscal year 2022-23, marking an increase of 30% year-on-year. The return on equity (ROE) for the same period stood at 18.5%.

The increasing trend in ownership by institutional investors underlines the confidence that major financial players have in Axis Bank's growth trajectory and market strategies. This diverse ownership base provides a robust support system for the bank, as institutional investors often have a long-term view and are less prone to panic selling during market fluctuations.

In summary, Axis Bank's ownership structure is characterized by a significant presence of foreign institutional investors alongside domestic institutional stakeholders, coupled with a stable promoter holding, which together provide a strong foundation for its ongoing operations and future growth.

Axis Bank Limited Mission Statement

Axis Bank Limited, one of India's leading private sector banks, articulates its mission statement with a focus on customer-centric service and sustainable growth. The mission emphasizes providing innovative financial solutions to enhance customer satisfaction and promote financial inclusion.

As of March 2023, Axis Bank's mission is encapsulated in the phrases: "To be the preferred provider of financial services in India" and "To empower individuals and businesses with innovative solutions." This vision aligns with the bank's strategic initiatives aimed at enhancing customer experience and optimizing operational efficiency.

The bank's commitment to its mission is reflected in its financial performance and customer outreach. For the fiscal year 2022-23, Axis Bank reported a total income of ₹68,829 crore, while its net profit stood at ₹12,098 crore. This represents a growth of approximately 30% year-on-year in net profit, underscoring the effectiveness of their mission-driven strategies.

Strategic Objectives

Axis Bank has outlined several strategic objectives that are directly linked to its mission statement:

• Enhancing customer experience through technological innovation.
• Promoting financial literacy and inclusion across diverse customer segments.
• Pursuing sustainable business practices that contribute to long-term growth.
• Building a robust risk management framework to safeguard stakeholder interests.

The bank's focus on sustainable practices is evident, with a reported ₹2,000 crore investment in renewable energy projects in 2022.

Financial Performance Overview

To further illustrate Axis Bank's alignment with its mission, the following table highlights key financial metrics from the most recent fiscal year:

The data indicates that Axis Bank is not only growing in terms of income and profitability but also improving its asset quality, which is crucial for maintaining customer trust as part of its mission.

Customer-Centric Initiatives

Axis Bank has launched various customer-centric initiatives that embody its mission:

• Digital Banking Services: Expanded mobile and internet banking platforms, achieving a user base of over 33 million customers as of 2023.
• Financial Inclusion Programs: Initiatives targeting rural areas, resulting in a growth of microfinance portfolio to ₹3,500 crore.
• Customer Feedback Mechanisms: Implemented real-time feedback systems leading to a customer satisfaction score of 85%.

These initiatives reflect Axis Bank's ongoing commitment to enhancing customer satisfaction while driving growth aligned with its mission statement.

How Axis Bank Limited Works

Axis Bank Limited operates as a private sector bank in India, providing a wide range of financial products and services. As of March 2023, Axis Bank had a total asset base of approximately ₹10.65 trillion, showcasing its robust presence in the banking sector.

The bank offers services including personal banking, corporate banking, and retail banking, which are segmented into various categories such as loans, deposits, investment advisory, and foreign exchange services. The bank works through various channels, including branches, ATMs, and digital banking platforms, enhancing customer accessibility.

Axis Bank’s operations are heavily supported by technology, with a significant investment in digital banking solutions. The bank reported around 82.5 million digital banking users as of June 2023, demonstrating the increasing shift towards online transactions. This digital approach not only facilitates customer convenience but also drives operational efficiency.

Axis Bank's retail banking segment, which contributes significantly to its revenue, includes various loan products such as personal loans, home loans, and loans against property. As of September 2023, the bank’s retail loan book stood at approximately ₹4.5 trillion, reflecting a growth of around 18% year-on-year.

In regard to corporate banking, Axis Bank serves a range of industries, offering tailored solutions for working capital, term loans, and project financing. The corporate loan portfolio reached approximately ₹3.2 trillion by the end of Q3 FY 2023, growing steadily in line with economic recovery.

The bank’s wealth management and investment services have also gained traction, targeting high-net-worth individuals (HNWIs) and offering products like mutual funds and insurance solutions. The assets under management (AUM) of Axis Bank’s wealth management division stood at around ₹2.1 trillion as of March 2023.

Axis Bank has also made strategic efforts in sustainability by integrating Environmental, Social, and Governance (ESG) criteria into its operations. The bank has financed over ₹12,000 crore in renewable energy projects, emphasizing its commitment to responsible banking.

The bank’s strong governance practices and risk management strategies play a crucial role in its operational integrity. Axis Bank has implemented advanced analytics for credit risk assessment, enhancing its ability to manage non-performing assets (NPAs).

As per the latest financial reports, Axis Bank holds a strong liquidity position with a liquidity coverage ratio (LCR) of over 136%, significantly higher than the regulatory requirement. This liquidity strength is a critical component in managing market volatility and ensuring business continuity.

Axis Bank continues to focus on expanding its branch network and enhancing customer engagement. As of March 2023, the bank had around 4,600 branches and over 12,000 ATMs, reflecting its strategic emphasis on accessibility and convenience for customers across various regions.

Through these multifaceted approaches, Axis Bank Limited maintains its position as one of the leading financial institutions in India, contributing significantly to the economic landscape while focusing on sustainable growth and innovation in banking services.

How Axis Bank Limited Makes Money

Axis Bank Limited generates revenue through a diversified business model, primarily comprising interest income, non-interest income, and various fees associated with its banking services.

Interest Income

Interest income is the largest contributor to Axis Bank's revenue. As of March 2023, Axis Bank reported total interest income of ₹88,347 Crores, representing an increase from ₹77,057 Crores in March 2022. The growth can be attributed to an increase in loan disbursements and a higher yield on advances.

Loan Breakdown

Non-Interest Income

Non-interest income includes fees, commissions, and earnings from trading operations. For FY2023, Axis Bank reported a non-interest income of ₹20,164 Crores, an increase of 15% from the previous year. This income is derived from various sources:

• Fees on banking services: ₹8,500 Crores
• Wealth management: ₹3,200 Crores
• Investment banking: ₹2,700 Crores
• Trading income: ₹5,000 Crores

Asset Management and Insurance

Axis Bank also earns income from its subsidiaries in asset management and insurance sectors. The mutual fund business under Axis Mutual Fund has assets under management (AUM) of approximately ₹2.67 Lakh Crores. The insurance arm, Axis Life Insurance, reported a new business premium of ₹1,200 Crores for the fiscal year.

Digital Banking Initiatives

In recent years, Axis Bank has invested significantly in digital banking, leading to increased customer acquisition and engagement. As of FY2023, the bank reported that over 70% of its transactions are conducted through digital channels. This has resulted in lower operational costs and improved service offerings.

Cost-to-Income Ratio

Axis Bank's cost-to-income ratio stood at 45% in FY2023, indicating efficient management of expenses relative to its income generation. This metric reflects the bank's commitment to maintaining profitability while investing in growth.

Market Position and Competition

Axis Bank is one of the leading private sector banks in India, ranked fifth in terms of total assets, with a market share of approximately 7% in the Indian banking sector. The competitive landscape includes major players like HDFC Bank, ICICI Bank, and State Bank of India, which also offer similar services, impacting Axis Bank's pricing strategies and revenue growth.

In conclusion, Axis Bank's diverse revenue streams, effective cost management, and emphasis on digital banking position it favorably within the competitive banking sector, facilitating sustainable growth and profitability.