Axis Bank Q2FY25 profit spikes 18%—see what’s driving its digital dominance

Axis Bank has reported a strong financial performance for the quarter ending 30th September 2024, with profits and digital expansion leading the charge. The bank’s net profit surged by 18% year-on-year (YoY) to reach ₹6,918 crores, while its operating profit grew by 24% YoY to ₹10,712 crores. This significant growth reflects a balanced approach between its physical expansion and innovative digital offerings.

Q2FY25 Financial Highlights

The Indian private banking firm’s net interest income (NII) rose by 9% YoY, amounting to ₹13,483 crores. This contributed to a steady net interest margin (NIM) of 3.99%, underscoring its efficient asset management strategies. Non-interest income saw an impressive growth of 34% YoY, driven by fee and trading income.

The board approved these results during a meeting in Mumbai, reinforcing the bank’s strategic focus on enhancing its product portfolio and customer experience. Axis Bank also saw a 14% YoY increase in its total deposits, reaching ₹10,86,744 crores, with term deposits alone growing by 21%. Advances grew by 11%, highlighting a healthy expansion in both retail and SME sectors.

Digital Innovations Propel Growth

Axis Bank’s commitment to digital transformation has been a crucial factor in its performance. The bank expanded its offerings in the Unified Payments Interface (UPI) space, now dominating the market with a 31% share as the leading UPI Payer PSP. This growth was further bolstered by the launch of the UPI-ATM, an integrated Android cash recycler offering cardless cash withdrawal services.

The bank’s mobile application, open by Axis Bank, continues to rank among the top-rated mobile banking apps globally, boasting over 15 million monthly active users (MAU). Additionally, its credit card offerings have seen substantial growth, with 1.06 million new credit cards issued in Q2FY25 alone, securing a 14% market share in India’s credit card sector.

Balancing Digital and Physical Expansion

CEO Amitabh Chaudhry highlighted the importance of integrating digital prowess with physical growth. He mentioned that the bank added 150 branches in the last quarter, strengthening its presence in both urban and rural areas. Chaudhry emphasised the need to maintain a balance between digital expansion and on-ground customer proximity, which he sees as pivotal for sustained growth.

Sustained Digital and Retail Push

Axis Bank’s aggressive digital strategy extends beyond payments. The launch of India’s first ultra-luxury credit card, PRIMUS, in partnership with Visa, targets elite clientele with tailored experiences and services. The bank has also made strides in supporting businesses through its new offering, neo for merchants, providing a comprehensive suite of services to support the merchant community.

Meanwhile, the bank’s retail loan segment recorded a 15% YoY growth, with personal and credit card advances growing by 23% and 22%, respectively. The SME loan book grew by 16%, reflecting a diversified lending portfolio. This broad approach, coupled with innovative digital solutions, has positioned Axis Bank as a leader in the Indian banking landscape.

Asset Quality and Capital Adequacy

The bank’s asset quality remained stable, with its gross non-performing asset (GNPA) ratio declining to 1.44%, a 29 basis points reduction YoY. The net NPA stood at 0.34%. Axis Bank’s capital adequacy ratio (CAR) also remained strong at 16.61%, supported by its organic capital generation and prudent provisioning.

Outlook: A Focused Approach to Growth

Moving forward, Axis Bank is committed to scaling up its digital offerings while continuing its branch expansion strategy. The bank’s focus on enhancing digital capabilities, coupled with a targeted physical presence in high-growth areas, sets it on a trajectory for sustained growth in India’s competitive banking sector.