"Staying true to our ethos of customer centricity our 78000+ team memberscollectively and individually went above and beyond their call of duty to serve ourcustomers our communities and most importantly our nation and the economy during one ofthe most challenging phases of our lifetime
Fiscal 2020-21 was truly an extraordinary year in history. The unprecedented healthcrisis that still continues to unfold across the country brought the best out of us as wemade steady progress towards our medium-term GPS objectives while delivering on our 'DilSe Open' promise to our stakeholders.
Through the year our support to customers and communities in helping them emerge fromthe COVID pandemic remained unwavering. I am proud of the commendable efforts andcharacter displayed by all the team members of Axis family. I would also like to thank allthe COVID Warriors for the tremendous job that they have been doing especially thehealthcare professionals who are constantly fighting all odds to save thousands of lives.
As the economy continues to combat the second wave of unprecedented COVID-19 pandemicwe as a Bank reiterate our commitment of being 'Open' to our customers' needs concernschallenges and aspirations. My heart goes out to all who have been directly impacted bythe pandemic. However the fast pace of vaccination and slowdown in new infections inseveral states do provide hope. I am confident that we can and will come out of thistogether.
Despite the challenges that came our way in 2020 our proactive approach towardsstrengthening the organisational core and technological capabilities along with focusedexecution helped us overcome the odds. Significant investments in digital bankingadopting a cloud-first technology and analytics-driven decision-making definitely helpedus deliver strong operational performance. Every passing quarter we improved led by ourfocus on building granularity across business segments and One Axis' philosophy todrive sustainable and profitable growth. At the same time we continue to remain prudentand conservative in fortifying our balance sheet and enhancing our capital levels in anuncertain environment we all are hoping is short lived.
During the fiscal we witnessed consistent and strong sequential growth in depositsadvances and fees. Our focus towards building a quality liability franchise saw sustainedmomentum with 18% growth in average granular retail deposits consisting of CASA and RTDdeposits. Our advances grew 9% y-o-y led by quality growth across our Retail CommercialBanking (CBG) and Corporate banking segments.
The operating profitability continued to remain steady with 16% growth in net interestincome and 10% growth in operating profits despite our prudent stance on accountingpolicies. Our focus on granularity in fees continued to play out well with the share ofgranular retail and transaction banking including forex-related fees increasing to 83%.We also continued to deliver on our profitability vector of improvement in efficienciesacross our businesses with reduction in cost to average assets to 1.96% from 2.09% inprevious fiscal.
We remained proactive and prudent in our approach towards provisioning and policies andhad been very selective towards restructuring and ECLGS.
Over the year we took several actions across accounting and provisioning policychanges to ensure that our balance sheet remains resilient across cycles. We increased ourprovision coverage ratio from 69% to 72% while also building significant additionalnon-NPA provisioning buffers of over '12000 crores which translates to standard assetcoverage ratio of 1.95%. Further our rule-based provisioning norms have ensured that NPAsare provided early and adequately. The Bank's net NPA declined from 1.56% to 1.05% and thefund-based BB and below book remained flat in percentage terms as compared to the lastfiscal.
During fiscal 2020-21 the Bank successfully raised '10000 crores of capital. Thisstrengthened the Bank's capital ratios further with total adequacy of 19.12% and CET1ratio of 15.40%. The Bank's strong balance sheet and healthy capital position ensures thatwe enter this cycle from a position of strength.
As an organisation we have been constantly evolving challenging ourselves to raise thebar on innovation and strengthening our core to transform into a more agile andfuture-ready organisation. We have been working towards our goal to deliver distinctiveand world-class customer experience through an optimal mix of human touch and technology.
During the year we continued to strengthen the core pillars of our franchise - peopleproducts and technology for driving executional excellence. We made some importantorganisational structure changes in wholesale and retail segments to streamline andsimplify our functioning and bring in greater accountability productivity andefficiencies.
We also bolstered our leadership team significantly with our existing leaders taking onlarger and newer responsibilities while we brought in new talent who had the breadth andthe experience to match our aspirations.
The pandemic also accelerated the technology investments and execution oftransformation projects.
We significantly ramped up the opex and capex spends in technology towards modernisingthe core systems scaling up the Cloud portfolio for supporting the real-time businessmodels and building resilience across our operations. We adopted a cloud-first approachfor our digital banking platform with over 50 initiatives on cloud which is one of thehighest in this area within the Indian financial service sector.
During the year we started a multi-year technology transformation programme that willaccelerate our journey towards our goal of being a sustainable future-ready Bank. We havemade significant investment in the Business Solutions Group' to drive innovativetechnology solutions and build greater collaboration between business and technology. Wehave adopted agile methodology with multiple cross-functional squads working on over 220high-priority organisation-wide transformation projects.
The execution of these projects have largely remained on track with 50% of them fullycompleted with promising outcomes in the form of reduction in turnaround times improvedproductivity and better customer experience. The implementation of tech-driventransformation project
Sankalp' in our CBG segment for example has helped in reducing the loanapproval time by nearly 75% while pushing the productivity of RMs up by 2 to 3 times.
Our investments towards strengthening our operational and technological infrastructurewell before the outbreak of pandemic in India ensured that all our critical operationswere executed on time. Almost all of our branches and ATMs too remained functionalfollowing all the health safety and regulatory guidelines.
We implemented one of the largest Work-From-Home programmes in the industry with over20000 concurrent users who were able to work remotely with access to all the Banksystems. Further almost all of our team members co-ordinated seamlessly amongst themselvesand external stakeholders using the collaborative tools. We also enabled over 60000frontline team members on Bring Your Own Device (BYOD) environment thereby helping themto maintain connect and serve customers during the pandemic.
We also strengthened our digital collection infrastructure that helped in higher demandresolution during the year.
The Bank has over the last decade built a strong Retail franchise with powerfuldistribution network wide deposit customer base and robust data analytics capabilitiesthat have enabled us to grow our business in challenging time period.
On the deposits side our focus on deepening existing liability relationships andacquiring the quality customers as part of premiumisation strategy continued to progresswell. During the year we acquired over 6.7 million new liability relationships includingover 2.8 million new savings account relationships that had higher average balances acrossretail savings and premium segment accounts.
Our emphasis on acquiring top corporate relationships in salary segment resulted in 25%y-o-y growth in our salary deposits book.
During the year our domestic retail advances book grew 11% as we continued with ourfocus on growing the secured retail lending products segment like home loans LAP SBBthat grew by 12% 20% and 30% y-o-y respectively. Our disbursements across the securedsegments continued to improve sequentially through the year and touched new highs aided byimprovement in operational processes and focused execution.
Over the last two years we have initiated several large process transformation andtechnology initiatives across our branches and other distribution channels to bring ineffectiveness and efficiencies while delivering distinctive and seamless omnichannelexperience to our customers. During the year we sourced over 70% of retail assets fromexisting Bank customers; with ~56% contribution from our branches.
We have also increasingly been leveraging our alternate Axis Virtual Centre (AVC)channel that has over 1500 virtual relationship managers across six centres to deepenrelationships and scale up growth. This channel continues to play an important role inreaching out to customers with over 3 million customer contacts every month.
Our Deep Geo initiative continued to scale well as we expanded coverage to 1577branches and enrolled over 13600 Common Service Centres (CSCs) to deepen presence inrural and semi urban markets. The deposits from our Deep Geo branches grew 19% y-o-y whilethe disbursements grew 59%.
As a result of our weekly region specific and focused product drives strategicpartnerships with agri-corporates and digital enablement of processes our overall ruralloan book grew 17% y-o-y.
We continued to maintain our strong positioning across the cards and paymentsbusinesses as we focused on growing this segment profitably in a manner that meets ourrisk and return hurdles. We have built strong partnerships with large players in retailpayments space that now form the core of our Known to Bank (KTB) strategy through whichwe intend to scale up our business further. During the year we sourced nearly 2 lakhcredit cards through our partnerships with Flipkart and Google Pay. In the UPI space wefurther strengthened our position in fiscal 2020-21 with a market share of 17% as PayerPSP. The Bank now has partnerships with all the major third- party UPI apps in theecosystem with more than 186 million customer VPAs registered as on 31 March 2021. OurMobile Banking platform continues to be recognised as one of the highest rated financialapps in the country.
Our wealth management business Burgundy' continued to grow strongly with its AUMgrowing 45% y-o-y to cross '2 trillion mark. Our vintage team of relationship managerswealth specialists and advisors along with our strong product portfolio offerings helpedto scale up our Burgundy Private' proposition to cover over 1660 families withassets of nearly '50000 crores in just 15 months since its launch.
Our third-party products distribution business in Retail that we had created in fiscal2019-20 to have a dedicated focus delivered strong 30% y-o-y fee income growth on back ofcontextual product launches and enablement of digital processes. In our retail forexbusiness where we are one of the largest players we launched outward remittance on mobileapp and fully digital forex card issuance platform to further enhance the customerproposition.
We have made strong progress in our Digital Banking initiative that we had started infiscal 2019-20 with the objective of not only reimagining end-to-end customer facingpropositions but also to scale up growth and productivity. We have 800-plus people fullydedicated to digital transformation of the Bank including a strong in-house full stacktechnology team of 110 people in roles across design front-end and back-end developmentDevOps Quality Assurance etc.
We have adopted OPEN approach towards reimagining customer journeys which involvesrebuilding entire journey with zero' operations orientation using proprietary'in-house capabilities and delivering solutions that are Ecosystems' capable andmetrics oriented. During the year we launched bouquet of digital products acrossdeposits loans cards and investments many of them being industry first like ourcloud-native loan management system built in-house and the full end-to-end digital forexcard proposition. These products have started making contribution to the Bank' sourcingwith close to 1.35 lakh digital SA accounts opened leveraging the video KYC while 71% offixed deposits and over 40% of Mutual Funds were sourced digitally in fiscal 2020-21. TheBank's initiatives on the digital front have been widely recognised and the Bank wasawarded the 'Best Digital Bank' by Asiamoney and Financial Express during the year.
The Bank has been a pioneer in data analytics in Indian banking industry and has builta dedicated team of over 400 members consisting of data scientists data engineers andbusiness analysts with techno functional skillsets. We have been leveraging our strongdata analytics capabilities across the business functions for not only improvingcross-sell customer experience risk management and collections but also in frauddetection operational optimisation and budgeting. Big Data Lake is now an integral partof our data analytics landscape and we have made significant progress towards furtherenhancing our Big Data Tech Stack with ability to analyse and serve on Cloud. During thefiscal we also sourced 72% of credit cards and 57% of personal loans digitally backed byour big data led analytics and proprietary machine learning models.
In the corporate segment our focus has been to build granularity and grow the bookprofitably emphasising on segments that offer high growth opportunities and better RAROC.During the year our focused segments like Mid-Corporate and MNC delivered 31% and 49%y-o-y growth. Our CBG which is one of the most profitable segments in Wholesale Bankdelivered strong performance with 13% y-o-y growth in advances.
We continued our focus on deepening relationships with better rated corporates with anaim of not just lending balance sheet to these clients but also growing our wallet shareof non-credit business like trade forex and cash management. We have made significantprogress towards becoming the transaction bank of choice for corporates with the share ofnon-credit granular fees in overall corporate and commercial banking fee mix increasing to57% in fiscal 2020-21 from 52% in fiscal 2019-20.
A key area of distinctiveness is our ability to deliver 'One Axis' to our customer. Weare currently one of a kind full-service Wholesale Bank that currently offers variedsolutions across all financial services. From traditional banking products debt capitalmarkets investment banking to NBFC and Retail banking products like Burgundy wealthmanagement salary and trust services forex and commercial credit cards.
During the year our various business segments within Retail and Wholesale Bankcollaborated with our subsidiaries to provide solutions to our clients thereby deepeningthe customer relationships further. We have over the last two years strengthened ourcapabilities across our subsidiaries by strengthening the senior management teamsdeveloping innovative product offerings backed by improvement in processes and wideningour distribution reach through physical and digital channels.
The rigour and rhythm and concerted efforts made by teams collectively as One Axis havestarted reflecting in the superlative financial performance of our domestic subsidiariesthat together delivered total profits of '833 crores up 75% y-o-y. Axis AMC continued togrow faster than the industry to deliver 2x growth in profits while our retail brokeragesubsidiary delivered 10x growth in profits. Axis Capital continued to maintain itsdominance in equity capital markets with 52 deals. Axis Finance too delivered profitablegrowth with ROE of 14.60% and healthy capital adequacy ratio of over 20%. Even as ourinvestments in operating subsidiaries over last two years have remained flat at '1815crores these operating subsidiaries delivered 17% CAGR growth in net worth.
However our focus still continues to be on further scaling up the subsidiaries so thatthey gain higher market share in their respective businesses. During the year AxisSecurities acquired the customer trading accounts of Karvy Stock Broking to become thethird largest player with total customer base of 3.6 million. We have always believed inincreasing participation in the fast-growing life insurance space and recently completedthe stake acquisition in Max Life Insurance to become a co-promoter in India's fourthlargest insurance company.
Through these unprecedented times we have remain committed towards our ambition ofdelivering on our medium-term strategic goals under the vectors of Growth ProfitabilitySustainability. During the year we continued to invest in several initiatives andstrategic projects in line with our GPS strategy.
- Led by our focus on building granularity across businesses and strong focus onexecution we have delivered strong growth across our focused segments
- Our CASA deposits grew 20% with the share of CASA deposits increasing 372 bps to 45%in overall deposits. Retail SA grew 19% while the CA growth stood at 26%
- Our Corporate loan book including TLTRO grew 16% with significantly higher growthacross our focused segments like Mid-Corporates and MNC
- Our CBG loan growth stood at 13% y-o-y
- Retail disbursements touched all-time highs during the fourth quarter
- Net profit grew by 305% y-o-y
- Operating profits grew by 10% with NIMs improving to 3.53%
- Our cost to assets has moderated during the year to 1.96% from 2.09% and we continuedto focus on building cost consciousness across the Bank
- We continued to build granularity in our fee income with segments like third-partyproducts distribution and transaction banking growing by 30% and 9% respectively
- Our domestic subsidiaries delivered 75% y-o-y growth in net profits
- In the last two years we have taken concrete actions towards strengthening the corearound policies processes controls and operations
- We have progressively strengthened our risk management framework and our creditunderwriting processes
- We have made significant progress on legacy issues with the proportion of BB andbelow book having steadily declined over the years
- We have been proactive and prudent and have built significant additionalprovisioning buffers of over '12000 crores with standard asset coverage ratio of 1.95%
As an organisation we have always believed that our employees are our greatest assetand true brand ambassadors of our culture and core values. Our employees especially ourfrontline team displayed unbridled enthusiasm creativity agility and ownership throughthis challenging year. I take great pride in the fact that we were one of the first banksto set in motion large-scale changes in our working model by introducing rostering acrossbranches work from home' across large offices and ensuring hygiene safety and securityacross the Bank. We also took the lead in introducing hybrid model of working andredefining conventional work and jobs beyond full time on-site employment with the launchof GIG-A opportunities during the year. The new ways of working provided the much neededflexibility and added to our productivity.
At Axis we continued to invest in employee learning and their growth across levelsbusinesses functions and geographies. We also launched several certification and talentdevelopment programmes for our middle management team towards building their leadershipcapabilities so that they can shoulder the mantle of spearheading our GPS objectives tothe next level of achievement and success.
The community continues to be a critical stakeholder for us. During the year the Bankcommitted significant funds towards curbing the spread of COVID-19 pandemic. Axis BankFoundation played its role by providing relief supplies and facilitating higher standardsof hygiene and medical infrastructure in deep rural areas.
The Foundation also continued its initiatives towards positively affecting the rurallivelihoods by scaling up financial inclusion and skill development programmes to over 0.9million households as part of its mission to reach 2 million households by 2025.
During the year we made a conscious and concerted effort to scale up ourEnvironmental Social and Governance (ESG)-aligned capabilities and performance byintegrating ESG topics into agendas of pertinent Board Committees. The Bank hasestablished an ESG Steering Committee comprising Heads of key departments who shall act asESG champions within and outside the Bank and help drive key mandates across the Bank. Iam happy to share that the Bank improved its ratings performance across key external ESGassessment platforms like S&P Dow Jones MSCI and CDP during the year even as itcontinued to feature in the prestigious FTSE4Good Emerging Index for the fourthconsecutive year in 2020.
Even as we continue to witness the impact of second wave of COVID I sincerely hopethat the acceleration in vaccination drives and continued fiscal and monetary measures bygovernment and the regulator would help the economy to recover from this pandemic by H2 offiscal 2021-22. We are planning to use this disruption in business to further strengthenour core. We believe that our building blocks are firmly in place with granularity nowbuilt across businesses improving operational performance strong capital and balancesheet position to counter any unforeseen risks arising out of COVID wave 2. The medium-term growth drivers remain firmly in place on the back of several initiatives taken by thegovernment to boost manufacturing and small industries and recent shift in globalmanufacturing and supply chain dynamics towards India.
In such an environment large banks with healthy operational performance strongbalance sheet and capital position superior risk management and operational capabilitieswould continue to grow faster than the overall sector.
I reiterate my gratitude to all my colleagues for their relentless and selfless effortsin keeping the promise of Dil Se Open' to our stakeholders despite all odds. I thankour external stakeholders for their continued willingness to partner with Axis Bank in itslong-term growth journey.
We as One Axis will continue to challenge ourselves and strive towards building adistinctive Axis Bank.
MD & CEO