MUMBAI : Intense competition among banks to grab a share of the corporate loan pie has led to some amount of liquidity loss, said Rajiv Anand, deputy managing director at Axis Bank.

In the three months to June, the private sector lender witnessed a 5% year-on-year (yoy) decline in total corporate loans. 2.16 trillion. This segment accounts for 31% of the bank’s total loan book, as on June 30. Its loans to small and medium enterprises, and retail borrowers grew 27% and 25%, respectively, from the same period last year.

“On the lending side at this point in time, especially at the short end of the spectrum, we think the competition to some extent is poor, not for risk but for liquidity. We don’t see those kinds of issues in our target segments at this stage,” Anand told reporters. news during the bank’s conference call about Q1 financial performance.

Anand said that the bank is seeing significant growth in its target banking segments of small business, SME and medium business, among others and the environment is conducive for business growth.

“Having said that, what I’ve always said is that especially on the corporate side it’s very important for us to grow profitably. Whenever and wherever we get an opportunity to grow profitably, we certainly will,” Anand said.

Some of Axis Bank’s partners have reported significant growth in their corporate development during the June quarter. Other large banks, especially those owned by the government, have been expecting a positive push from the business sector, led by the push for growth in infrastructure resources. With the banking system, loans to industries – micro, small, medium and large — stopped 31.6 trillion as on May 20, up 8.7% from the same period last year, data from the RBI showed. The regulator has not yet disclosed data on credit delivery to the sector in June.

“We are a big lender and we are really an important banker for corporate India. If you look at the market share that we have got in various lines of business on the corporate side, it is not as if we are not doing business with big corporations,” said Anand.

On Monday, the bank reported a near doubling of its profit for the June quarter 4,125 million, due to higher interest income and lower terms than the same period last year. The profit was higher than the Bloomberg consensus estimate 3,658 million.

“We continue to move forward with clarity and intent in a quarter where external signals were mixed; systemic credit growth picked up with double-digit credit growth over the past four months; spending has continued high; working capital requirements are strong and combined and funding needs, are driving credit growth,” said Amitabh Chaudhry, chief executive, Axis Bank.

Regarding the plan to buy Citibank’s customer accounts in India, Chaudhry said the bank has applied to the Competition Commission of India (CCI) and expects the approval to come in the next six to eight weeks. The bank, he said, expects to close the transaction by Q4 of FY23. On March 30, Axis Bank said it has agreed to buy Citibank’s consumer business in India for 12,325 million (1.6 billion dollars) in cash, apart from paying others 1,200 million to Citi to support the transition.

On Monday, while management declined to give any specific loan growth targets, it said the bank would continue to grow faster than the market. “We really don’t give guidance or an outlook on where we stand. Overall, we have maintained that we will grow faster than the industry average and I think it would be fair to keep that in mind in terms of our outlook going forward,” said Puneet Sharma, chief financial officer, Axis Bank.

Axis Bank’s net income grew by 14 percent 7.01 trillion and deposits grew 13% year-on-year 8.03 trillion as on June 30.

Shares of Axis Bank on BSE closed at 728.2 on Monday, down 0.38% from the previous close.

Get all Industry News, Banking News and Updates on Live Mint. Download Mint News App to get Daily Market Updates.

More Less



Source link