Axis BAnk Case Analysis

ABOUT Axis Bank

• Incorporated as UTI Bank, headquartered in Mumbai

• First Branch and registered office inaugurated at Ahmadabad

• Completes first profitable year in operation in 1995

• Deposit crosses Rs.10bn mark in 1996

.

• Opens its first international branch in Singapore• Opens Representative Office in Shanghai• Crosses the 2,000 ATM mark in 2006• Opens a Full Licence Bank Branch in Hong Kong• Re-brands itself as Axis Bank• Mumbai, Jul 30 2007 : UTI Bank on Monday

rechristened itself as Axis Bank.

Shareholding Pattern of Axis Bank.

• The Axis banks business is divided into four segments:

• Retail, corporate, treasury and merchant banking.

• Apart from this the bank is also into insurance, investment banking, mortgage financing, credit cards, and depository services amongst others.

Services

Retail banking • Deposits schemes • Loans and advances

– Personal loans – Housing loans – Cards – Consumer durables – Auto loans

Personal banking • Accounts

– Term deposit – Fixed deposit – Recurring deposit

• Cards – Different variant like: Gold plus card, Gold card, Silver & silver

plus cards.

Corporate banking • Accounts

– Normal Current Account – Trust/NGO Savings Account

• Services – Private Equity, Mergers & Acquisitions – Advisory Services – Capital Market Funding – E-Broking

Axis Bank Performance

• As on the year ended March 31, 2010 the Bank had a net profit of Rs 2514.53crores

• The bank now has 1035 branches including extension networks across 30 States and 4 Union Territories.

• The bank also has overseas offices in Singapore, China, Hong Kong and Dubai.

• Crosses the 4,293 ATM mark in Mar 2010

• Launches Platinum Credit Card, India's first EMV chip based card

• Axis Bank share is now trading at Rs 1359.00 (18th Aug2010).

Axis Financial PositionParticulars Mar 07 Mar 08 Mar 09

Deposits 58,785.60 87,626.22 117,374.11

Advances 36,876.48 59,661.14 81,556.77

Share Capital 281.63 357.71 359.01Net worth 3,402.21 8,770.69 10,214.80

Book Value 120.80 245.19 284.53Interest earned 4,560.40 7,005.32 10,835.49

Interest expenditure 2,993.32 4,419.96 7,149.27

Net profit 659.03 1,071.03 1,815.36Net NPAs 0.61% 0.36% 0.35%

Total Assets 73,257.21 109,577.84 147,722.06Return on Assets 1.10% 1.24% 1.44%

Rs in crs.

Axis Bank Ratio Analysis

Particulars Mar 07 Mar 08 Mar 09

Capital Adequacy Ratio 11.57 13.73 13.69

Net profit margin 12.01 12.22 13.31

Operating Expense / Total Inc 23.26 26.20 24.95

Return on Net worth (%) 19.37 12.21 17.77

Net Interest Income/total funds 4.01 4.74 4.98

Non Interest Income/total funds 0.03 0.02 0.06

Net Profit / Total Funds 1.07 1.17 1.41

Earning per share 23.40 29.94 50.57

Equity Dividend (%) 45.00 60.00 100.00

Comparative AnalysisParticulars Axis HDFC

Deposits 117,374.11 142,811.58

Advances 81,556.77 98,883.05

Share Capital 359.01 425.38

Net worth 10,214.80 15,052.73

Book Value 284.53 344.44

Interest earned 10,835.49 16,332.26

Interest expenditure 7,149.27 8,911.10

Net profit 1,815.36 2,244.94

Net NPAs 0.35% 1.49%

Total Assets 147,722.06 183,270.78

Return on Assets 1.44% 1.10%

As on Mar 09. Rs in crs

Comparative Ratio AnalysisParticulars Axis HDFC

Capital Adequacy Ratio 13.69 13.60%

Net profit margin 13.31 11.35

Operating Expense / Total Inc 24.95 35.06

Return on Net worth (%) 17.77 15.32

Net Interest Income/total funds 4.98 6.86

Non Interest Inc/total funds 0.06 -

Net Profit / Total Funds 1.41 1.42

Earning per share 50.57 52.77

Equity Dividend (%) 100.00 100.00

Net Interest margin (%) 3.33 4.40

Comparative Reach Analysis

Banks

Branches

ATMs Cities Inception yr

Axis 835 3595 515 1994

HDFC 1416 3382 550 1995

ICICI 950 3500 21,408 1895

SBI 9000 6800

Axis BankAxis Bank

Marketing OverviewMarketing Overview

Mission

• Customer Service and Product Innovation tuned to diverse needs of individual and corporate clientele.

• Continuous technology up gradation while maintaining human values.

• Progressive globalization and achieving international standards.

• Efficiency and effectiveness built on ethical practices.

Marketing Objectives

Axis Bank want to achieve following marketing objectives by the end of the year 2011.

• To get the market capitalization 500 Crore• To get the 200 Crore retail investment. • To get 125 Crore Corporate investments. • To get the 175 Crore Capital investments.

Axis Bank Shift In StrategyAxis Bank Shift In Strategy

Initial Business ModelCorporate assets being the focus areaCorporate loans offered high yields to the bankStrategy ShiftFocus on retail finance segmentPhysical & Technology infrastructure improvement

The Strategy-Making, Strategy-Execution Process for AXIS Bank

Achieve organic growth through Retail banking

Decreasing the NPAs to below 1% of total assets, to aggressively tap the retail domain via the use of ATMs

Building infrastructure & adhering to the latest technology

Spread across 248 locations, 109 branches with 4293 ATMs, Adoption of Finnacle, I-banking etc

Reduction in NPAs % to 0.61%, increase in retail deposits, Retail banking powering growth in fee based income

Revise as needed in the light of actual performance, changing conditions, new opportunities & new ideas.

Current StrategyCurrent Strategy

Managing the changing customer needsRisk ManagementDealing with regulationsKeeping pace with technologyProduct and service innovation

Complementary Strategies for Business Growth & Development

Strategic alliances and collaborative partnershipsTie up with Maruti and Hyundai for selling car loansTie up with Bajaj Allianz General InsuranceATM sharing based on alliances such as SBI and multibank payment networks

Value Chain Activities

It Outsourcing selected value chain activities1.Outsourcing recruitments to monsterindia.com2. Outsourcing print operations to Xerox3. Outsourcing of EBP and ATM management

Offensive Strategic Moves

Superior Customer ServiceRange of services on ATM machineAggressive growth in card businessExpansion of geographical reachFinancial Advisory Services

Use of Internet

I-Connect net banking serviceInternet based electronic remittances portalE-Payment facility for payment of central excise & service taxSeamless Electronic Transfer U“I -trade

SWOT ANALYSIS OF AXIS BANK

Positioning strategy

– Axis bank has positioned itself as a bank which gives higher standard of services through product innovation for the diverse need of individual & corporate clients. So they want to highlight following points in their positioning statement:

• Customer centric • Service oriented • Product innovation

Features Of Axis Bank

• Anywhere Banking

• Instant Fund Transfer

• Internet Banking

• At-Par (Multicity) Chequebook

• ATM cum Debit Card

• Mobile Banking

• Phone Banking

OTHER SOFTWARES

• Electronic Clearing Service (ECS Credit) .

• NEFT ( National Electronic Fund Transfer)

• Real Time Gross Settlement (RTGS).

TECHNOLOGICAL ADVANCEMENTS

• Extensive Network . • Centralized transaction processing system

• Centralized Phone Banking system

• Mobile Alert Service.

Information Technology:

• Played a vital role in growth of organization

• To retain a competitive edge, the Bank's technology infrastructure is continuously upgraded

• Use of technology-first among Indian banks in submitting centralised

Return for foreign exchange transactions first bank in the India to market EMV chip

embedded Debit Platinum, Travel Currency and Credit Platinum cards

New Initiatives

Remittance Card:

• A unique product that has changed the way money is sent across borders.

• Available as a delivery mode for remittances made through the Web Portal www.Remit2India.com.

• Based on the remitter’s request, a personalised Remittance Card is prepared for the beneficiary, which is preloaded with the funds remitted to him in INR.

VISA Money Transfer Service:

• To send money from an AXIS Bank account to any of the VISA Cards issued in India

• To pay VISA credit card bills by giving the card number and making a direct payment

• The sender’s account would be debited instantaneously with the transferred amount, but the funds will reach the beneficiary’s VISA Card within one or two days.

• The service has been enabled through all Axis bank’s ATMs and i-Connect (Internet Banking)

EMV standard based Platinum Credit Card:

• Card has an embedded chip, which stores cardholder’s information in an encrypted format, thereby providing the highest level of security to the cardholder against possible misuse.

• Offers clear authentication of debit and credit payments combined with easy fraud detection.

• The chip cannot be duplicated, ruling out counterfeiting and skimming. This makes your card safer and secure than any other card in India.

Tie-ups with various Govt. Departments:

Govt. Departments:

• DGFT ePayments• MCD - Municipal Tax or Fees ePayments• MCD - eTendering Project• Sampark - Utility Bill ePayments• Bangalore One Project - Utility Bill ePayments

Alternate Channels:

• ATM Channel

• Internet Banking Channel

• Mobile Banking Channel

ATM Channel

• All its ATMs are connected to Base24 ATM switch

• The Bank through its ATMs offers the following services:– Banking Services– Mobile Airtime Refill – Bill Payment e.g.: BSNL, MTNL– Life Insurance Corporation Premium Payment– Purchase and redemption of UTI Mutual Fund

Schemes through the ATM.

Shared resource:

• Bilateral ATM sharing arrangement:– State Bank of India – ABN Amro Bank– Bank of Rajasthan – Karur Vysya Bank– Andhra Bank

• Multilateral ATM sharing arrangement:– Cashnet (A shared network run by Euronet India Pvt. Ltd.)

– BANCS (Formerly known as Swadhan. Now run by E Funds Ltd.)

Internet Banking Channel:

• Axis bank provides a number of value-added services on the Internet banking platform

• Services:

a) Funds Transfers• To the customers own Axis Bank account• To any Axis bank account• To any account in any other bank in India (Power Transfer)

b) Bill Payment

• Presentment or EBPP (Electronic Bill Presentment & Payment):– Bill presentment happens– The biller will send an electronic version of the bill

for acceptance and payment

• Direct Payment: - No bill presentment happens- The customer is free to select the biller and pay

accordingly to his convenience.

c) Shopping etc.

Mobile Banking Channel:

• Debit or credit in your account:Receive alerts on your mobile phone every time there is a debit or credit in your Axis Bank account for more than

Rs. 5,000

• You can also request for the following information: - Balance- Last three Transactions- Know the status of your cheque- Request security balance in demat account

Growth Prospects of Axis• Over the last five years, the CAGR for loan growth for the banking industry

has been 25-26 per cent; for Axis Bank it has been above 40 per cent. • Nonetheless, the bank is still expected to grow its loan portfolio at 1.5-

1.7x the industry average. • In FY09 its advances grew at the rate of 37.5 per cent. • In FY10 they are expected to grow at the rate of 27-28 per cent and in

FY11 at 25 per cent. • For the banking industry as a whole, the loan book is expected to grow at

18 per cent in FY10 and 16 per cent in FY11. • Thus, Axis Bank’s fast pace of growth is expected to sustain over the next

couple of years.

Core Values of Axis

• Customer Satisfaction through• Providing quality service effectively and efficiently• "Smile, it enhances your face value" is a service quality

stressed on• Periodic Customer Service Audits

• Maximizations of Stakeholder value• Success through Teamwork, Integrity and People

Conclusion !!!!

• AXIS bank has differentiated itself very well on the basis of high level service and product quality.

• They have successfully implemented the change and due to this their market share has increased only despite of tough competition prevails.

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