Axis Bank Ltd

NSE:AXISBANK

Earnings Call Transcript 2023-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to Axis Bank conference call to discuss the Q2 FY '23 financial results for the quarter ending as on 30th September 2022. Participation in the conference call is by invitation only. Axis Bank reserves the right to block access to any person to whom an invitation has not been sent. Unauthorized dissemination of the contents or the proceedings of the call is true prohibited, and prior explicit permission and written approval of Axis Bank is imperative. [Operator Instructions]. 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, MD and CEO. Thank you, and over to you, sir.

[Amitabh Chaudhry, executive]

Thank you, Stephen. Good evening, and welcome, everyone. Apart from me and Puneet, we have on the call, Rajiv Anand, PMD; Amit Talgeri, Chief Risk Officer and members of bank's leadership team. Subrat Mohanty, Ravi Narayanan, Sumit Bali, Manish and Sanjeev Moghe.

The growth momentum in India continues to hold up well at a time and majority of the world is staring at a slowdown. This was reflected in several macro indicators. The system credit growth and domestic consumption remained strong. We, at Axis Bank, remain optimistic on the growth of positives in tanned economy and our ability to support and take advantage of them.

In this quarter, we continued the strong performance in our identified strategic segments. We saw continued momentum in granularization and premiumization of deposits, market share gains in Bharat and SME segments, industry-leading performance in cards, further strengthening of our transaction banking franchise and acceleration on digital banking outcomes.

A quick [indiscernible] on digital banking. Today, we are the highest-rated mobile banking app in the world. We are extremely proud of it. I will speak about it later in this discussion. Coming back to the quarter, we stayed on course on 3 core areas of execution of our GPS strategy, which was around deepening our performance-driven culture, strengthening the core and building for the future.

Let me now discuss each of these in further detail. On performance-driven culture, we continue to show an delivers improving profitability metrics. Our consolidated annualized ROE for quarter 2 financial '23 stood at 18.9% and has consistently exceeded 15% in the last few quarters. While Puneet will provide granular details, let me highlight the trends across key operating metrics.

Our core operating performance in the current quarter is strong on all parameters, both year-on-year and sequentially Net interest margins improved 57 basis points year-on-year and 36 basis points quarter-on-quarter to 3.96% in the second quarter of the financial year.

Fee growth of 20% year-on-year and 8% quarter-on-quarter with retail fees up 28% year-on-year and 30% quarter-on-quarter.

Core operating profit grew by 43% year-on-year and 19% quarter-on-quarter. OpEx growth moderated to 14% year-on-year and almost flat sequentially. PAT at INR 53.3 billion, was up 70% year-on-year and 29% quarter-on-quarter. The bank's ROA has significantly improved from 0.66% in financial year '19 to 1.66% in the half year annualized. And consolidated ROE is up from 8.58% to 17.25% during the same period. Our ROE is up 545 basis points year-on-year.

We looked at the growth registry and consistently gained market share. We now have strong market position in multiple businesses. On advances, we continue to grow faster than the industry with incremental market share of 7% in last 3 years and closing market share of 5.7% as of September '22. On deposits, we have gained about 69 basis points market share in 3 years to reach 4.7% as of September '22.

In credit cards, we continue to be ranked fourth largest with over 13% incremental spend market share in the last 9 months against 11.4% period ending market share for cards in force.

On the payment side, we continue to have strong positioning with 16% market share in UPI and 15% in mobile banking. Our Burgundy AUM has grown by 3x CAGR in over the last 5 years. And today, we are the fourth largest player in wealth management business.

Similarly, on the wholesale side, we continue to have strong market share in transaction-oriented for businesses, a 12% market share in foreign LCs, 9% in NFT payments and 8% in our TGS. We've also been the leading player in the DCM space over the last decade. The strong growth in our granular deposits continue with average CASA balances up 13% year-on-year. Our liability strategy given through premiumization, granularization, and BTB remains on track, reflected in 220 basis points year-on-year improvement in share of premium prevent and existing to bank retail savings deposits.

From an inflow perspective also, we continue to see improvement in the quality of our deposit franchise. Early improvement in the quality of granularity growth is visible to reduction in outflow rates. The steps we have taken towards improving the quality of deposit franchise have definitely started yielding results. However, this is the beginning of an improvement journey that will gain their low gain traction over time.

We are the fastest-growing card acquisition franchise. We issued over 1 million cards this quarter, up 88% year-on-year. Our credit card spends were up 70% year-on-year and 17% quarter-on-quarter and card advances were up 47% year-on-year.

Our loan to the bank strategy continues to progress well with 31% of our card sourced through partnerships. During the quarter, we launched a co-branded credit card in partnership with Samsung India that will help us to further increase card penetration in Tier 2 and Tier 3.

In quarter 2, we continue to witness strong momentum across our focus again SME business segment that grew 22% year-on-year and 28% year-on-year, respectively. The strength of our wholesale franchise is demonstrated through 9% year-on-year and 10% quarter-on-quarter growth in our domestic corporate loan book. We have achieved this while simultaneously improving our margins. The semi segment continues to remain a key growth driver for the bank. Our mid-corporate book grew 49% year-on-year and 9% quarter-on-quarter. Our SUV segment delivered strong growth of 69% year-on-year.

The combined portfolio of the 3 segments: Small Business Banking, SME and Mid Corporate grew 41% year-on-year and now constitutes 22% of the loan book, up 542 basis points in the last 8 quarters.

Our government business performance remains strong as we continue to add new mandates and gain market share. This business has transitioned from being deposit-centric to more solution-centric. We continue to win single-model accounts and stand among the top performance in private banks based on the central mobile account opportunity, both of which have helped us to drive growth in government deposits. Around forcing a winning mindset, our winning mindset is reflected in our strong business performance and multiple external resolutions we received in the quarter across stage 2, FinTech innovation and other businesses. The bank's access mobile ad ratings in the play would have gone up from 4.6 to 4.8 now.

As I said earlier, we are now rated as the world's highest rating mobile banking app on the play store with over 15 lakhs of views, which is the highest across 59 global banks, 8 global neobanks and 50 Indian fintech apps. The Axis mobile app has over 10 million monthly active users, close to 52% sales account and 43% KA customer registrations and 4 million-plus loan account registrations. The app now handles over 64% of all service requests by volumes and levels up as our largest branch.

The bank will partnership with CRMNEXT, one the best CRM implementation at the Asian Bank of Financial Technology Innovation Award 2022. We also won the data engineering excitatory hosted by analytics in damage. We've awarded and revised the bank for excellent use in producing outcomes at large scale with respect to our fertilization project. During the quarter, the bank won 2022 Greenage Excellence Award for India large corporate banking and middle banking -- middle market banking segments in the second [indiscernible] year. The bank was realized for its distinct qualities like the big business, knowledge of transaction banking needs, coordination product specialists and customer service.

The bank, Dubai International Financial center brands also on Customer Service Excellence award in the banking category as we recently held in Middle East International Business Awards. The Bharat Banking segment also won the best [indiscernible] for financial improvement initiative of the [indiscernible] Transformation conference.

As far as [indiscernible] is concerned, our strong balance sheet lends support to drive our aspirations. Our asset quality is now on the best-in-class with net NPA of 0.51%, high provision probably 80% and standard asset coverage of 1.6%. Our internal approvals are becoming largely sufficient to fund the business growth in quarter 1 and quarter 2. Our CET1 stood at 15.1% compared to 15.24% in March 2022.

We continue to build our next-generation technology architecture. And we have under modernize the core and strengthen technology capability significantly the last few years to undertake transformational through banking. Projects. Project Neo is all about building a world-class basin corporate bank, leadership on APIs is a cornerstone to win new clients and new transaction banking businesses and existing clients.

Corporate our strategy pivot towards APIs, and we have built a strong product market fit via best-in-class billet, build an industry best wide area of API, spanning all transaction banking products and their integrated banking experience to partnerships. We are witnessing a strong momentum in customer adoption and are partnering with our customers to offer the optimal solution based on the maturity we have become 1 of the first in the industry to launch a suite of trade APIs for corporate to serve customers going live successfully.

Digital onboarding to API [indiscernible] enable seniors onboarding integration for customers. We have seen over 10x growth in transaction volumes and 2x growth in adoption. We expect the momentum to sustain over the coming quarters as we further expand our capabilities and partnerships. What is extremely important is adoption has been amongst the leading corporates in the country and across industries from financing institutions, government clients to large conglomerates.

Building for the future, we have created good procurements in date and are today across the par. Our base banking unit open is now operating at scale. The impact of this is visible across various business segments. In line with our open flow launched account aggregated based loans and credit cards this quarter. We now have built a full stack for end-to-end deseeding and cards for both existing and new customers.

Now any region of India our customer otherwise can come to any of our vehicle channels and get instant digital tablet loans on care cards, we refit or credit card.

We were the first bank to do live on the account a the framework and we are the first to launch this capability. We are seeing good initial traction. Our reversal volumes have grown 30% month-on-month since launch. This quarter, we launched an upgrade to our mobile app as part of our channel program. We have crossed multiple milestones and will be launching a few more sign-in changes to our app going ahead. We are upgrading our [indiscernible] and now made basic and self-serve the entire setup and process. We believe we are now best in class in the country on this front.

Our bank-wide program to build it in a quick update on that. Bharat Banking strategy continues to scale up well. Our distinctiveness initiative around Bharat Banking continues to deliver strong outcomes. Reline of the markets are an important growth area for us. And we see significant opportunity to gain market share in these regions while driving higher profitability. During the quarter, we added 1,600 entrepreneurs to take our overall [indiscernible] network to 54,000 plus that would act as extended arms for our 2,000 Bharat branches. As a result of our focused approach, we achieved strong 28% year in growth in disbursements across all the major product segments and delivered 46% year-on-year growth in Euro loan book.

Our subsidiaries communication value. The 1 access approach now embodied across access group is reflected in lower performance of our subsidiaries. The total analyze part of our directives in first half was up 14% year-on-year. A quick update on Citibank consumer business integration, that CCI approval is in place. We expect to complete the transaction by end of fourth quarter of fiscal 2023, which is a legal close date. At present the integration management office with the trailing committee is in place that's working across 17 key work streams around people, technology and business operations. The progress on customer communications, design of end-state operating model, day 1 business and operational readiness and the performance of existing Citibank consumer business is trending in line with our expectations.

In closing, in the global geopotical macro environment even uncertain, which has prompted significant downward divisions by multilateral institutions of the growth and trade forecast. In the domestic context, too, there are a few challenges. Inflation has remained above 6%. Current account is specially high and deposit attrition in the system has been slower than paid growth. The monetary and fiscal policy response in India has been agile, while balancing the policy challenges towards the lease growth sacrifice outcomes.

We move and our engagement with our customers gives a strong reason to remain optimistic.

I will take a moment to step back on how we have fared since the end of Pandemic almost a year back. In the last 4 quarters, we have shifted our performance strategy upwards meaningfully. We are maintaining 15-plus ROE consistently. Our operating margins in NIM are in the zone of best-performing franchisees we see acceleration in our focus segments, and there is an all-round improvement in all key performance metrics on deposits and assets. We are leading the way on digital technology modernization and innovation. We believe, as a group, we are playing to our potential as we continue to build a strong futurity and open franchise.

I will now hand it over to Puneet for further comments.

[Puneet Sharma, executive]

Thank you, Amitabh. Good evening, and thank you for joining us this evening. We're talking about meaningful progress of strengthening our core business performance and ensuring that our balance sheet is resonate across cycles. I will discuss the sharing details of the financial performance of the bank for Q2 FY '23, focusing on our operating performance, capital and liquidity position, growth across our deposit centers and loan book asset quality, restructuring and provision.

Our operating performance in the current quarter is strong on all parameters, both Y-o-Y and sequentially. We have improved net interest margin significantly delivered robust growth in net interest income, growth in granular fees and control our operating expenses. The result in strong core operating profit growth coupled with benign credit costs resulted in a significant improvement in our ROA and ROE.

Net interest income for quarter 2 FY '23 stood at INR 10,360 crores, growing 31% Y-o-Y 10% Q-on-Q. NIM for Q2 FY '23 stood at 3.96%, growing 57 basis points Y-o-Y and 36 basis points Q-on-Q. Domestic NIM crossed 4% during the quarter. We had clearly articulated the drivers of our NIM improvement journey, the progress against each of the key drivers in the quarter is as follows. Improvement in the balance sheet mix, the growth in investments from other assets. Loans and investments comprised 86% of total assets as of September '22 compared to 83% as of September '21. Within advances, INR denominated loans comprised 93% of total advances as of September '22, as compared to 89% at September '21.

Within advances, the retail CD segment comprised 69% of total advances at September '22 as compared to 65% as of September '21. Low-leasing RAD of farms declined by INR 8,329 crores Y-o-Y and INR 4,612 crores sequentially. RID's comprised 3.09% of our total assets as of September 2022 compared to 4.28% as of September '21.

The bank continues to improve its risk return for side of its loan book. Our net interest income as a percentage to average risk rated interest-earning assets stands at 7.75%, improving 80 basis points Y-o-Y and 49 basis Q-on-Q. Fee income stood at INR 3,852 crores, growing 20% Y-o-Y and 8% Q-on-Q, 93% of our fee. Total retail grew 28% Y-o-Y and 10% Q-on-Q. Digital and mobile banking fees grew 45% Y-o-Y. Fees on retail cards and payments grew 53% Y-o-Y and 16% Q-on-Q. Fees from third-party distribution grew 20% quarter-on-quarter.

Transaction banking, including commercial card fees grew 30% Y-o-Y and 11% quarter-on-quarter. Trading losses for the quarter stood at INR 86 crores compared to a loss of INR 667 crores in the previous quarter and a profit of INR 473 crores for the same quarter last year. The NPL is largely on our corporate bond book 80% of this [indiscernible] above, and 96% is rated A minus and above.

We do not expect an economic loss on this book on as being equal in the poor period for this book is 4 to 5 years.

Operating expenses for the quarter stood at INR 6,585 crores, growing 14% Y-o-Y and flat sequentially. The Y-o-Y increase in rupee crore expenses can be attributed to the following reasons: 9% is linked to volume growth, 51% to technology and growth related. Investments for the bank, 1% of statutory costs and the balance for the AU linked growth. Technology and digital spend were 19% Y-o-Y constituted 8% of our total operating expenses. Staff costs increased 12% Y-o-Y and declined 1% quarter-on-quarter. We've added over 2,015 people from the same period as an end to our growth businesses and technology teams.

We have continued to maintain the social security provision for cumulative social securities provision for the bank stands at INR 227 crores. Cost-to-income ratio for Q2 FY '23 at 46% increased 328 basis points Y-o-Y and 61 basis points Q-on-Q. Operating expenses to average assets stood at 2.25% for Q2 FY '23, higher by 13 basis points Y-o-Y basis and 1 basis points sequentially. Given the strong momentum across all our businesses, we remain committed to consciously invest in our eco-business segment. The lower credit cost over the past few quarters has provided us headroom to run operating costs with a slightly elevated level we remain committed to achieving the around 2% cost of assets in the medium term.

Operating profit for Q2 FY '23 was INR 7,715 crores, increasing 30% Y-o-Y and 31% Q-on-Q. Core operating profit stood at INR 7,802 crores, growing 43% Y-o-Y and 19% Q-on-Q. Provisions and contingencies for the quarter were INR 550 crores, declining 68% Y-o-Y. The bank has not utilized any of the COVID-19 provision. This provision is entirely prudent. Annualized credit cost for Q2 FY '23 is 0.38%, declining 16 basis points Y-o-Y. Profit after tax stood at INR 5,330 crores, growing 70% Y-o-Y, 29% quarter-on-quarter.

Consolidated ROE stood at 1.87%, increasing by 59 basis points Y-o-Y and 39 basis points Q-on-Q. Subsidies contributed 7 basis points to the ROE for this quarter. Consolidated ROE for Q2 FY '23 annualized to 18.90%, improving by 545 basis points Y-o-Y and 344 basis points Q-on-Q. Subsidies contributed 41 basis points to the consolidated ROE this quarter. The cumulative non-NPA provisions as of September 30, 2022 stand at INR 11,625 comprising over COVID-19-related provisions of INR 5,012 crores, restructuring provisions of INR 1,100 crores.

Unsecured retail restructured loans have been provided at 100% and the rest operated and sale market standard asset provisions at higher than ability to INR 4,332 crores and weak assets and other provisions of INR 1,181 crores. Our provision cover all provisions, NPA plus non-NPA divided by NPA stands at 138.3% improving 1,454 basis points Y-o-Y and 480 basis points Q-on-Q.

Our capital adequacy ratio, including profits for the half year ended 30 September is 17.72%. Our CET1 ratio stands at 15.14%. The prudent corporations started to a capital cushion of 55 basis points over and above 40% capital adequacy. Our LCR ratio for the quarter was 131%, improving sequentially. Our [indiscernible] INR 55,513 crores. Reinstated assets of the bank as of 30th September, 2020 stand at 66%.

Growth across our liability and loan center. Amitabh has discussed the progress on customer acquisitions rows of liability and on present opening remarks. Please report Slide 18 and 19 for details around the quality of our liability franchise and detailed slides and other answers in our investor presentation. Our CASA ratio on an NAV basis was 46%, increasing 172 basis points and 251 basis points Q-on-Q.

Our loan book gross of IBC sold grew 19% Y-o-Y and 5% Q-on-Q. Our loan book continues to get nongranular and balance sheet retail advances constituting 58% of overall advances corporate loans of 31% and CDT at 11%. 68% of our loans are floating rate with positions as well in the rising interest environment, 45% of our fixed rate book matures in 2 months. Breakup of the floating rate loan book, a benchmark type and MCLR reticence is set out on Slide 11 of our investor presentation.

Retail advances grew 22% Y-o-Y and 3% sequentially unsecured [indiscernible] for the quarter constituted 34% of the total disbursement in the quarter. Q2 FY '23 retail assessment for our small business banking, real NPL book were up 33%, 28% and 26% and Y-o-Y, respectively. [indiscernible] portfolio grew [ 47% and 23% ] Y-o-Y, respectively. The retail loan book now represents healthy characteristics 89% being secured. The credit card spent for Q2 FY '23 grew 70% Y-o-Y. Industry expense growth is being driven by a pickup in commercial card spend. We are consciously focused on growing the profitable retail segment. We are progressing well on our endeavor to build a profitable and sustainable corporate bank, details of rating composition incremental sanction quality of the talk of Slide 35 of our presentation.

Corporate loan book, including IBPC grew 7% Y-o-Y and 6% quarter-on-quarter. Offshore home sale advances are largely faced finance related and [indiscernible] branch. 97% of the over and corporate loan book in big cities in the exposure and 95% is rated in account. The commercial banking book grew 28% Y-o-Y and 7% sequentially. The quality of the CBG [indiscernible] building and a strong relationship net approach is reflected to our CBG car deposits on a quarterly average binders growing by 31%. Overall feet on the CBG business growing 14% Q-on-Q and 87% of our dividend book in PSL compliance.

Coming to thee performance of our subsidiaries. Detailed performance of our subsidies are set out on Slide [ 16 ] to 56 of our investor presentation. The metric subsidies reported a total net profit for H1 FY '23 of INR 585 crores, up 14% Y-o-Y. This translates into a return on investment of 46% and contributes 7 basis points to consolidated ROA and 31 basis points to consolidated ROE. Axis Finance delivered strong growth as a whole service customer focus franchise offering retail as well as total lending solutions. In quarter 2 FY '23, overall AUM grew 53% Y-o-Y and 8% quarter-on-quarter. Retail book grew over 2.6x and now constitutes 29% of the total loans up from 8% 2 years prior.

Axis Finance's book quality continues to be strong with net NPA of 0.40% negligible restructuring and stage 3 of 0.10%. Axis Finance H1 FY '23 PAT grew 53% to INR 210 crores with an ROE of 16.6% and a CAR of 19.6%. Axis AMC, average AUM grew 4% Y-o-Y in Q2 and the equity AUM was up 8% Y-o-Y. [indiscernible] portfolio grew 34% Y-o-Y in the quarter to take the total investor base to 13.2 million. In H1 FY '23, PAT grew 24% Y-o-Y to INR 183 crores. Axis Capital reported a H1 FY '23 INR 64 crores. Axis Securities continues to see strong taxing. New client additions in H1 FY '23 stood at 0.38 million, up 97% Y-o-Y. [ Broking ] revenues for Axis Securities grew 9% in H1 FY '23. And PAT for H1 FY '23 stood at INR 100 crores.

Asset quality provisioning and restructuring, annualized gross and net [indiscernible] ratio for the quarter improved Y-o-Y and Q-o-Q. The slippage, GNPA, NNPA and PCR ratios for the bank and segmentally to retail SME and corporate are provided on Slide 52 of our presentation. GMP was 2.50%, improved 103 basis points Y-o-Y and 26 basis points Q-on-Q. NPA was 0.5%, declining 57 basis points Y-o-Y and 13 basis Q-on-Q. PCR 83% improved 944 basis points Y-o-Y and 365 basis points Q-o-Q. We have not shown any nonperforming loans in the quarter.

The recoveries from written-off accounts for the quarter was INR 709 crores, increasing 32% Y-o-Y. Net slippages for the quarter adjusted for recoveries have written of sale was negative INR 152 crores. Reported net slippages for the quarter is INR 557 crores, declining by 21% Y-o-Y. Gross slippage for the quarter were INR 2,383 crores, lower by 38% Y-o-Y and Q-o-Q sequentially. For the quarter, 39% of gross [indiscernible] are attributable to link the cost for borrowers, which are standard and classified or have been upgraded in the quarter. The [indiscernible] of the bank declined 36% Y-o-Y and 2% sequentially.

Core restocking in 2.38% of gross customer assets. More details on the BB and deli and we start seeing a Slide 56 of the presentation. To summarize, consistent delivery of 15% plus ROE over the last 3 quarters, improving quality of coming and the profit in H1 FY '23 being sufficient to fund growth. We are demonstrating delivery across all the initiatives undertaken by the bank.

Our CASA ratio at 46% on an NAV basis as at 30th September, and only improvement in the quality of the [indiscernible] liability growth visible to reduction in our serious kit comfort that we have made a strong foundation for our liability CMA.

Our assessment is that improvements planned over the next quarters are on track with some inter-quarter fluctuations which are normal for a business of our scale and size. Focused growth segments like retail SME and mid corporates with better ad of continue to grow faster 22%, 28% and 29%, respectively. Our balance sheet resilience is visited to the strong capital adequacy and return ratios for the quarter. Overall coverage at 138.35% of GNPA and limited coverage restructuring of 0.38% places us in a good position in the current bank environment.

We continue to clearly monitor geopolitical inflation both domestic and international liquidity risk and its impact on cost of funds resulting policy action by all organizations and impact on our business and our client businesses are going forward.

We would be glad to take your questions now. Thank you.

[Operator]

[Operator Instructions]

The first question is from the line of Mahrukh Adajania from Nuvama.

[Mahrukh Adajania, analyst]

My first question is on margins. So congratulations on an excellent margin achievement. But I mean, how do you look at margins going ahead in the next, say, 2 to 3 quarters because they're still repricing [indiscernible]. And a part of the NCLR repricing apart from the EPLR book MCLRE pricing is also yet to come in. So how do you view margins over the next few quarters? .

[Amitabh Chaudhry, executive]

So we don't give guidance on margin, but maybe make a couple of comments here. One is that we have always talked about the fact that whatever we are trying to do in Axis Bank is to build a sustainable franchise and sustainable P&L. So the idea behind delivering a margin of this kind of to sustain it in a particular zone. We have always been guiding that are our first target is 3.8%. And obviously, we keep it there. We have now reached 3.96%. And obviously, all of us will try very hard to ensure that we remain the thin zone.

There are a couple of things which are replayed here. One is on 1 side, as you rightly pointed out, something cost will get repriced. Overall interest rates will continue to rise, and so there is a potential in the future that our cost of deposits will rise possible what we see until now. Secondly, on the flip side, yes, the impact of increase in some of the CR rates, which we talked about, will continue to come through. We will also hopefully see higher yield in some of our asset classes.

And that will also take time to kind of feed into our system. We have talked about the fact that with meeting the PSL requirements and ROI bonds are coming down, but that is again not played through ones because the impact on the spread has been lower because what is maturing as at a decent rate or as nonmature at a low rate. So the fact that whatever we have done on the side, the impact of that on has not concluded yet.

So there are various factors at play. Obviously, the axis will continue to try to ensure that -- as I said in the intro, we'll also like to ensure that we use this opportunity to invest back in the business as well as we can. So I'm not giving you a dragon, but I'm going only enough order to think through as to where we go to [indiscernible].

[Mahrukh Adajania, analyst]

Sure. Sir, just in terms of retail deposit growth. So you have given some numbers and talked about granularization and premiumization. But if you could give the like-to-like retail deposit growth or any quarter-on-quarter retail deposit mobilization growth so that we know the like-to-like number because currently, it's been marked by the conversion, right?

[Amitabh Chaudhry, executive]

So I mean, I'll give you some data points, not exactly really what you want. Our growth in CASA is 14% year-on-year, let industry, which is 10% year-year, so we continue to be higher and faster than our market share growth in total deposits, where because 10% of actually was 9% industrial. The first point is CASA is growing faster. Second, we continue to focus on district level market share gains, the number of districts where our market share is greater than 5% has improved by nearly 35% since March 2020.

Overall CV growth was restricted due to lower issuance. Our Premium segment, where you asked the question, Premium segment savings deposits are growing at the faster pace within user versus 14% for overall sales accounts resulting in share of premium segment deposits growing up by 220 basis points year-on-year. We saw INR 50 crores year-on-year growth in new corporate salary levels in first half of financial '23.

And last, an important point with increased focus on LCR excited deposits in financial '23. We have seen a 550 basis points improvement where we have obtained in weighted runoff of PD. So the focus is across every part of our franchise. And I'll give you some data points to read.

[Mahrukh Adajania, analyst]

Just 1 last question on OpEx. So now it's remained flat for the last 3 quarters. And of course, you did mention maintaining the medium-term guidance, but it actually remains yes. So how do you look at it going ahead?

[Puneet Sharma, executive]

[indiscernible] I think our guidance is on cost of assets and -- we do continue to maintain the medium to 2%, around 2% achievable, and we still committed to that number, and it will have multiple factors with structural cost savings, we have growth notes will drive us to achieve that number. And I think we're not offering shorter-term guidance on cost numbers as of late.

[Amitabh Chaudhry, executive]

And let me just add to what Puneet said, on cost side, we have invested over the last couple of years. We also want to ensure that we have to base investments initially incur costs upfront, but then you start getting productivity benefits to come through. So you might see it as a constant cost for a couple of quarters. But I think the way you should look like is that the industries which are made and now we have seen the productivity benefits come through. And so when the costs moving the same, we have seen a look on the revenue side. So we'll obviously continue to -- as we see the properties benefit come in a little bit, and we see the growth coming. We'll make some retina costs and hopefully, now rather than again going through a cycle like that, it will flow together. So the correlation will be sharper than what we've seen in the past.

[Operator]

The next question is from the line Adarsh Parasrampuria from CLSA. Mr. Parasrampuria sorry to enter, but you are not clearly audible, sir. [Operator Instructions].

[Adarsh Parasrampuria, analyst]

Yes. So question is on the margins, right? We don't give a lot of details around the improvement in the mix in terms of investment in retail within that unsecured in the RID's. And we obviously have a very large margin improvement. Part of it would be related to where the cycle is. Would it be possible for you to just indicate what kind of improvement in spreads would have been a little more structure from the mix side that will be really helpful to you can try and give some broad numbers there?

[Puneet Sharma, executive]

Adarsh, thanks for the question. Adarsh as you said RID journey has 2 variable assets plus liabilities I think they're structurally on the right path of the journey and we've reported to you the sequential improvement on each of the parameters across assets and quality of liabilities. I think that's where we will leave it at the moment. It's very difficult to call out what rates and what is transient at the moment. I think we are running business will be that response of that. All we say is all of our improvements are fundamental and structural and therefore, retention of the improvements [indiscernible].

[Adarsh Parasrampuria, analyst]

[indiscernible]

[Operator]

Sir, sorry to interrupt, but your voice is bit muffled. So if you can change the mode of connection, please? [Operator Instructions].

The next question is from the line of Kunal Shah from ICICI Securities.

[Kunal Shah, analyst]

Yes. Congratulations, Amit from me and the entire team. So firstly, now as you highlighted in terms of say, deals coming to the end. And maybe you highlighted in terms of the growth opportunities which are there and it visible across the broad-based growth that we are suggesting this quarter. So what would be the capital raising plans? And when can we -- are we looking at something in the near term?

[Amitabh Chaudhry, executive]

So maybe, I think Adarsh was trying to ask the same question maybe using cities, acquisition as to others as the question on to answer retail. And first, a couple of points here. One, if you look at our consumption of capital in the first 6 months of this year. Our profitability has ensured that the position of capital is minimum. So we are at 15.4%. Post [indiscernible] acquisition, which we are saying will happen in the first quarter of the calendar next calendar year or if it gets delayed a little bit, maybe in the second quarter of the -- to the next calendar year.

We will consume 177 basis points of capital. The benchmark we have set up internally gave us enough cushion to ensure that we are not under any pressure whatsoever to raise capital even post the acquisition. We want to be sure. We want to buy our time. We want to be sure about the price at which we raise capital. If we want to do it because we want to ensure that the shareholders which are already there, do not go [indiscernible] much.

So today, as we stand today, we have absolutely no intention as we signed today to was capital at least till the city addition even, even post that. We will obviously collude evaluate various alternatives, including whether we need to raise capital at all or not and then decide the right strategy depending on how we are doing, what conversion of our capital is for our running business at that point in time, how the market is, what the price is and whether the timing would be right at that point in time or sometimes it is the future. So I'm giving you 2 answers. One is that, we definitely don't see raising capital up to a certain point in time. And beyond that also, we will let you know once we reach any conclusion in terms of timing if any at that point in time. Does that answer your question?

[Kunal Shah, analyst]

Yes. Yes. That answers the question. And secondly, when we look at it in terms of the deposit, I think the traction has been more on the wholesale deposit rates compared to the retail for us. And I think this reprising given that [indiscernible] is higher. Now there will be further repricing which is going to happen out there. And we have seen this kind of improvement in the spread. So do we see raising the retail deposit rates and trying to gather more of retail deposits in the second half? [indiscernible] lower for us compared to other players, yes. .

[Amitabh Chaudhry, executive]

So we obviously have shared with -- when I lost the question earlier, some of the data points in terms of how our overall deposits are done. We are trying to solve many problems. We are obviously trying to solve for a franchise issue in terms of how we are working and how the riser and the is working on the overall retail franchise ensure that we can grow the deposits in a certain way. We are working to ensure that the share of proven deposit increases, we are trying to ensure that they have the outflow of the weighted average also has dropped down. We're also trying to ensure the shift between the RTD.

In RTD, we are also at the same time trying to expand our franchise. We are also doing at the same time. There are a number of things which we are doing. The reason I'm telling you all this is and it reads that as the liquidity sector the system and as market evolves, we will be strategic and tactical at the same time. Now when it includes trying to raise retail term deposits with on a more deposits. I mean it could -- what we have seen in the past, increasing term deposit rate by a small amount does not have a real impact in terms of ability to raise their deposits.

That ability to do more deposits quickly more on the wholesale side than the retail side. Retail side is more daily tackling and pushing with the customers, the 5, 10, 15 basis point increase does not really make a huge impact. That's for experiences. So rather than saying this is exactly what we'll do. I've given you a sense for what are some of the things that we are working on. We also, by the way, are obviously we have the promise that we'll work on them. We have been working on it. And now we need to ensure that we keep it in the same zone. So given all those factors at play, if some tactical means will help us in pushing the growth rate of the overall deposits, we will definitely look at it. Are we doing something that we take at this point in time, no, but we obviously keep all our options open.

[Kunal Shah, analyst]

Sure. And lastly, maybe during the call, if you can just share with respect to the next slide and maybe the IR is and maybe order which was there, if you can just share in terms of how the dynamics or maybe the acquisition could get impacted. So that would be great if you can make some comments on....

[Amitabh Chaudhry, executive]

[indiscernible] Max Life applied for various approvals under the agreement we have entered with them when we became a promoter of Max Life. As per the valuation of that particular proposal. Idea has taken a view on the transactions we have undertaken we are very clear that the transactions we have undertaken are part of 2 separate different agreements. And we do believe that our legal position is strong. But at the same time, we want to ensure that we work with the regulator rather than.

And so in that split, we will evaluate the order which has come and work with a to ensure that we can move forward rather the others are getting caught up in the transactions we have done in the past.

We stay very committed to the partnership as a promoter and bancsurance. We stay very committed to increase our stake to what we had signed up for. I do want to reiterate that we believe all these regulations have been followed through the deal process. But I do want to end up saying that our idea is that because we have a pretty decent stake in Max, we intend to stay with a promoter for a longer period of time. We would like to work with the regulator and find the right solution rather than we are as well as. So hopefully, that gives you insight on the transaction.

[Operator]

[Operator Instructions]. Next question is from the line of Jiten Doshi from ENAM Asset Management.

[Jiten Doshi, analyst]

Yes. Many, many congratulations, Amitabh, on an excellent result. I just want to find out your level of confidence in terms of the sustainability of this performance over the next 3 years as you plan the future cycles.

[Amitabh Chaudhry, executive]

As I said earlier, there are desire and our intention and whole execution has been around creating a sustainable franchise rather than trying to cover in quarter-on-quarter. Yes, over the last 7, 8 quarters, there have been some quarters where some metrics had not necessarily been in line with what the market expected. But our intent has always been to deliver consistency and stability and sustainability. So whatever metrics we are achieving, we do hope in the medium term, we will continue to maintain or improve them. And I can't comment quarter-on-quarter, but that's the intent. That's what the entire management team will try to review on.

[Jiten Doshi, analyst]

So are you reasonably confident that the foundation that you have built over the last 24 months is strong enough to get you where you want to go?

[Amitabh Chaudhry, executive]

Jiten with your support, hopefully, we will get there.

[Jiten Doshi, analyst]

I have now the question and many many thanks and lots of congratulations to the entire team. Very, very well done. I think you'll have stated the case with huge conviction, keep it up.

[Operator]

The next question is from the line of Abhishek Murarka from HSBC.

[Abhishek Murarka, analyst]

My question has actually been asked.

[Operator]

The next question is from the line of Mahesh M.B. from Kotak Securities.

[M. B. Mahesh, analyst]

Two questions. One is the lack of growth in retail deposits, which seems to be issued for the industry as overall. Is there any reason that you could execute that? Is there a retail tailings slowing down? What would you assume would be a possible reason for this

[Amitabh Chaudhry, executive]

So Mahesh, you are right, ultimately the liquidity has been set out of the system, and it does have an impact on overall deposit growth, the numbers are quite visible. The credit growth is right now paste deposit growth. So there is a standard for deposits. But immediately in the same as I would say that our market share in deposits is 4.7%. Yes, obviously, we have to be worried about the matter and what is going on. We are very clear that there is a post for us if we get our act right, if we get the holdout the franchise the way we want it to work, that even if the industry grows impacted, we can and we should aim for continuing to push our deposit growth as well. So let me ask Ravi here if you want to.

[M. B. Mahesh, analyst]

[indiscernible]. The question you're asking is that on 1 side, retail loans seems to be quite good. but retail deposit business seems to be going that well. Why -- how would you explain the dynamics that is working between both sides of the balance sheet for you and for the system as a whole.

[Ravi Narayanan, executive]

So thanks for that question. I think as Amitabh said, this divergence is being seen after some time. The consumption pattern has gone up substantially in terms of how the individual households as well as small businesses are working through. And therefore, in terms of the outflows that we are seeing as an industry -- that is the fundamental shift that has happened. Whether you call it as you can see credit card spend going up.

You can see consumption spending going up. You can see the cost of EMI is going up. And therefore, that is the fundamental shift that has happened disruptively in the deposit space. And that were really is flowing back into the system through corporate profits or in terms of higher corporate quarters in the past.

[Amitabh Chaudhry, executive]

So Mahesh, we are ready to work on building blocks, and it's not just about the retail deposits in the same thing applies on the wholesale side also, I talked a lot about what we're trying to do on transaction products business. I also talked a lot about how even on the digital side, we are trying to create customer relies where customers and actually just coming to work. So we are very focused on continuing to work on building blocks, which will allow us to grow at a different base in the medium to long term. We realize that there is a problem in the system in the short term. But the message we can give internally is our market share is where it is. We can definitely for us to grow at a certain date, there's not very difficult shooters. But yes, the whole culture, the ride rigor and all the work in propose, and we are confident that with all the measures which we are taking over a period of time, we should be able to get.

[M. B. Mahesh, analyst]

The second question is one of the challenges that most of us have on this side of the market side. The disconnect that you are -- the banks in general are so confident about growth and asset quality, and there is slowdown that seems to be there on the other side. But if we are not able to kind of connect the dots and come to a conclusion. How would you kind of respond on this question?

[Amitabh Chaudhry, executive]

No, Mahesh, you're asking a great question that given what is happening on the macro globally wean India to some extent, is there a possibility that the risk or the overall underwriting standards to retaliate or on asset quality to deteriorate over a period of time. We are watching some of these numbers very, very closely. I think access has moved the needle in terms of the asset quality has created over the last 3, 4 years. If you look at all our metrics, if you look at our 90 DPD, we believe we are best in class when we compare to some of the best franchises out there.

And we are not diluting our framework. We are watching our timber very, very closely. It required a commit also to kind of add any comments that he has. But it's something which we are -- lysis we are watching that any titration of any kind very, very closely because we're making a very good point that if the world is going to go through what it seems to be going through. There are some announces tomorrow that things could slip a little bit here in India, and we do want to get caught up in that scenario in [indiscernible]. Amit, do you want to add.

[Amitvikram Talgeri, executive]

I think a way just 1 point is that the risk framework that we've built also have been put in place thresholds for which we'll actually take risk action quite instantaneously. So the first [indiscernible] signed a problem for any of the segments that we operate or locations over a profile, there will be immediate risk actions that we will take and that those are frameworks that we've kind of built right for the last 2 to 3 years, especially post COVID.

[Ravi Narayanan, executive]

Right. And the other thing, I mean, if there are discontinuities in the sort of global economies as we go forward, maybe there will be some issues in terms of growth, and that is something that we could potentially worry about as we go forward. But I think 1 of the things that you should also consider is that corporate balance sheets are in pristine debt equity is at 0.5x, 0.6x. And so therefore, at least from the wholesale side, there is a great deal of comfort that given the fact that we've got -- I mean, the banking system at large has not done large-scale lending to the corporate sector over the last 3 to 5 years, and corporate balance sheets are in great shape. The probability that you're going to see risks play out very quickly in that space looks unlikely.

[M. B. Mahesh, analyst]

That's perfect, Ravi. The only way this time we see almost all of you -- all of the banks in the fact, the substantial risk that all of you guys are sitting on the SME space, where the market is available for us to track exceptionally [indiscernible] absolutely right.

[Ravi Narayanan, executive]

I think the -- I think as far as the SME side is concerned the 1 thing that you should consider there is the fact that -- it's a granular business across multiple sectors across multiple geographies. So 1 of the things that you're trying to do is to ensure that you are diversifying risk as far as possible. and ensuring that sort of the correlations between sectors is -- I mean, we do track that, and it is relatively low. Second is the collateralization that is available in this sector. So those are the 2, I would argue, mitigant to the SME sector. But there, once again, if you look at early delinquent numbers, et cetera, that there doesn't seem to be anything to worry about at this stage.

[Operator]

The next question is from the line of Ajit Kumar from Goldman Sachs.

[Ajit Kumar, analyst]

SP1 Coming back again on the deposit side, what is driving this high car growth in this quarter, 13% Q-on-Q, that is 1. And while you have taken multiple states to improve the liability side as you have explained, can you guide in terms of time lines, when we'll start seeing [indiscernible] in terms of deposit growth picking up our [indiscernible].

[Ravi Narayanan, executive]

So you heard Amitabh talk about the building blocks in place and some of the -- you are beginning to see some of the early wins on the current account side. We're winning significant mandates on cash management. We're winning significant mandates on our government businesses. We are winning significant mandates on the trade finance side as well. And I think -- and if you look at the market shares on NEFT, RTGS, GST, all those are going up, it really means that thanks to the technology we've now put in place Increasingly, customers are using our current accounts as the current account of choice. And that is helping us build transaction balances and therefore car balances. And I do believe that this growth here is sustainable.

[Ajit Kumar, analyst]

Okay. Okay. So there is no one-off, yes. I mean, it is going to be sustainable going forward in current account. .

[Puneet Sharma, executive]

There will always be -- it is a current account. So there will always be some lumpiness. And that one-off lumpiness will always be there. I mean it's not as there's anything unique to this quarter.

[Operator]

The next question is from the line of Nitin Agarwal from Motilal Oswal.

[Nitin Aggarwal, analyst]

Congratulations on really great numbers. So first question is around the margin and as we announced in this quarter, we have taken a big lead time covered what been the last quarter year take 8 to 10 quarters for at now we have beaten that number. So what has really changed on process of this you are always welcome, but I was most in curious to know like what has really changed, we have drive such a big jump that we didn't like indicated in the last quarter.

[Puneet Sharma, executive]

Thank you for the question. I think broadly, we've spoken about the multiple initiatives that the bank is contain to create a robust platform across multiple asset system, both on the asset and ability side. The progress on each of those work teams have delivered the current result. I'm happy that it is not positive and the outlook we provided, but it is as tax hard core banking that has been with the numbers for the quarter.

[Amitabh Chaudhry, executive]

I appreciate it, but Nitin, I'll add something there. But increase in reverse rate allowed us an opportunity to move on some of the funds faster than what we are integrated. And I think given that the whole system is working towards improving NIM our ability to react and move on that move forward on basis to help us. But as eerily pointed out, it is the whole system is was very clear that we had to get the margin to the zone which we have been covering to you for some time.

[Nitin Aggarwal, analyst]

And the second question is on the business growth now why you have explained to the retail deposit up. But knowing that the CD ratio is now hitting close to. So do you see sense we limit the advances growth for the year because first half has been relatively soft, and we are looking for a pickup in the second half. So can this come in the way of like chasing the advantages in the second half?

[Amitabh Chaudhry, executive]

So first, principles that we obviously would like to do things the about in the same room, we would not like to just sort of grocery again, goes down the part of showing growth and satisfying them in the process. Now assuming we can keep our mix impact, we can keep our NIMs intact. We do believe that there are sources of deposits out there which we can raise, which will allow us to manage that growth because there are a number of news which are living to us. Obviously, in the long run, we want to build franchise where the CASA ratio is higher in where it is. We obviously would like to ensure that the retail TD growth picks up. the penetration levels, which are right now lower and comparison of the other does pick up. And obviously, we are working to a bit. But in the short term as the portion will come away, we do have flexibility to raise that money or reasonably long term, quite quickly. So we'll have see capitalizing those opportunities if they show up.

[Operator]

Ladies and gentlemen, due to time constraint, we take the last question from the line of Sameer Bhise from JM Financial.

[Sameer Bhise, analyst]

Just looking at Slide 19, I just wanted to understand the split on the retail [indiscernible] balances. Could you kind of highlight what would be the approx range of salary balances within the split? And secondly, the 49% number is only Burgundy and Burgundy private. Is that the right way to look at it?

[Puneet Sharma, executive]

Thank you for the question. I guess Slide 19 that you're referring to for the benefit of others is the customer petites that we publish, and we want to order the balance across the customers to reset from denitration to be...

[Sameer Bhise, analyst]

We don't want so detail but some trajectory on where would, What range would the salary share be would be helpful.

[Puneet Sharma, executive]

So we don't disclose the savory share across the customer [indiscernible] therefore, that's not a number that we'd like to talk about. And to your second question on I would request you to look at the footnote on the same slide. This will include Baldpate Best priority and proceeds and our investments, which is content specifically with that exposure.

[Operator]

Thank you. I would now like to hand the conference over to Mr. Puneet Sharma for closing comments. Over to you, sir.

[Puneet Sharma, executive]

Thank you, Stephen. Thank you, ladies and gentlemen, for taking the time to speak with us. It's been a pleasure. If there are any other questions that we have not been able to answer please keep to the factories and answer them subsequently. Wishing you and your families a very happy Diwali and all the best for the event. Thank you and goodnight.

[Operator]

Thank you. Ladies and gentlemen, on behalf of Axis Bank, thank you for joining us, and you may now disconnect your lines.