Axis Bank
India’s third largest private sector lender Axis Bank is on a very sound footing, especially in the private sector banking space. The Bank reported a good growth story without adding stress to the assets. It in fact maintained its asset quality with net NPAs at Rs. 838 crore, expanding to 0.37% from 0.35% as of 30th June 2013. Bank’s capital position is very healthy with CAR (as per Basel III) at 15.85%, thanks to the Rs. 5,500 crore QIP and preferential allotment undertaken in January this year, which keeps it adequately capitalized and fuel growth.
The company’s growth is also led by a retail story wherein savings bank deposits for Q2 grew 18% (YoY) and domestic CASA and Retail Term Deposits constituted 73% of total domestic deposits. Net Profit for Q2FY14 grew 21% (YoY) at Rs.1,362 crores, while Net Profit for H1FY14 rose 22% at Rs.2771 crore. Bank’s cost-to-income ratio stayed at moderate levels of 41.5% in Q2. With a branch network of 2,225 and 11,796 ATMs, compared to its peers, HDFC Bank and ICICI Bank – valuation of Axis Bank is favourable, given its sound and consistent financials. PSU banks are most certainly on a weak wicket and private sector banks are more preferred, being healthier and on much firmer solid ground with most frontline private sector banks showing steady growth.