Axis Bank Limited, India’s third-largest private sector bank, has emerged as a significant player in the country’s financial services landscape. As of April 05, 2025, the bank offers a wide range of banking and financial products across retail, corporate, and digital segments. This article explores Axis Bank’s business model, its financial performance in Q3 FY25 (October-December 2024), and provides insights into promoter details and the shareholding pattern.
Axis Bank Business Model
Axis Bank operates a diversified business model that integrates retail banking, corporate banking, and digital banking services. Established in 1993 as UTI Bank and rebranded in 2007, it has grown through organic expansion, strategic acquisitions, and technological innovation to cater to a broad customer base.
Key Components of the Business Model
- Retail Banking
Axis Bank provides personal banking services, including savings accounts, fixed deposits, loans (personal, home, auto), credit cards, and wealth management. Retail loans, such as small business banking and personal loans, are a focus area for growth. - Corporate Banking
The bank serves large corporates, SMEs, and mid-sized enterprises with offerings like working capital finance, trade services, treasury solutions, and infrastructure financing. This segment leverages Axis Bank’s extensive branch network and relationship management. - Digital Banking and Payments
Axis Bank is a leader in digital payments, holding a 30% market share in UPI payer PSP transactions. Its mobile banking app, rated 4.7 on Google Play Store, supports over 15 million monthly active users. The bank also excels in merchant acquiring (20% terminal market share) and credit card issuance. - Strategic Acquisitions
The acquisition of Citibank India’s consumer business in July 2024 expanded Axis Bank’s credit card and retail banking portfolio, adding premium customers and enhancing its urban presence. - Fee-Based Income
Granular fee income, constituting 94% of total fees, comes from retail banking, transaction services, and third-party product distribution, reducing reliance on interest income.
Challenges in the Model
The model’s reliance on unsecured retail loans and credit cards has led to higher slippages, as seen in Q3 FY25. Integration costs from the Citi acquisition and competitive pressures in deposit mobilization also pose risks. Additionally, a high loan-to-deposit ratio makes it sensitive to liquidity fluctuations.
Q3 FY25 Earnings
Axis Bank released its Q3 FY25 (October-December 2024) financial results on January 16, 2025, reporting a modest profit increase overshadowed by higher loan-loss provisions and muted income growth. Below is a detailed breakdown of the performance.
Financial Highlights
- Net Profit: Consolidated net profit rose 4% year-on-year (YoY) to Rs 6,034 crore from Rs 5,797 crore in Q3 FY24. Sequentially, it declined 5% from Rs 6,370 crore in Q2 FY25.
- Net Interest Income (NII): NII grew 9% YoY to Rs 13,606 crore from Rs 12,532 crore, but increased only 1% sequentially, reflecting subdued loan growth.
- Revenue (Operating Income): Total operating income rose 8.8% YoY to Rs 19,578 crore from Rs 17,987 crore, driven by a 6% YoY rise in fee income to Rs 5,972 crore.
- Net Interest Margin (NIM): NIM stood at 3.93%, down 8 basis points (bps) YoY and 6 bps sequentially, due to higher funding costs.
- Provisions: Loan-loss provisions surged to Rs 2,185 crore from Rs 691 crore in Q3 FY24, reflecting a 46% YoY increase in fresh slippages (Rs 5,432 crore).
Segment-Wise Performance
- Retail Banking
Retail loans grew 11% YoY to Rs 5.6 lakh crore, with small business banking loans up 20% YoY. However, unsecured portfolios (personal loans, credit cards) saw elevated slippages, prompting tighter underwriting. - Corporate Banking
Mid-corporate loans increased 15% YoY, contributing Rs 2.3 lakh crore to the loan book (22.7% of total advances), up from 15% four years ago. - Deposits
Total deposits grew 13% YoY on a quarterly average balance (QAB) basis, with term deposits up 19% YoY. CASA ratio remained stable at 39%, among the highest for large private banks.
Key Factors Behind the Q3 Performance
- Slippages: Fresh slippages rose 46% YoY, primarily in retail unsecured loans, necessitating higher provisions (Rs 2,156 crore total contingencies).
- Stable Asset Quality: Gross NPA stood at 1.46% (down 12 bps YoY), and net NPA at 0.35% (flat YoY), supported by a coverage ratio of 77%.
- Fee Income: Retail fees grew 5% YoY, bolstering non-interest income amidst tepid NII growth.
Nine-Month FY25 Overview (April-December 2024)
For the first nine months of FY25, Axis Bank reported:
- Consolidated net profit of Rs 18,306 crore, up 8% YoY.
- Operating profit of Rs 28,420 crore, up 15% YoY.
- Return on Assets (ROA) at 1.8% and Return on Equity (ROE) at 16.9%.
The bank maintained a capital adequacy ratio (CAR) of 17.01%, with CET-1 at 14.61%.
Promoter Details and Shareholding Pattern
Promoter Information
Axis Bank’s promoters include public sector institutions that jointly established the bank in 1993: Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC), and Specified Undertaking of Unit Trust of India (SUUTI), among others. Over time, SUUTI’s stake has reduced significantly, reflecting a shift toward institutional and public ownership.
Shareholding Pattern (as of December 31, 2024)
Based on the latest regulatory filings:
- Promoter Holding: 7.91%, down from 7.93% as of March 2024, with no pledged shares reported.
- Foreign Institutional Investors (FIIs): 53.62%, down from 54.12% as of September 2024, indicating minor profit-taking.
- Domestic Institutional Investors (DIIs): 30.11%, up from 29.45%, with mutual funds holding 12.34% of the DII stake.
- Public and Others: 8.36%, slightly up from 8.10% as of September 2024.
The low promoter stake reflects Axis Bank’s evolution into a widely held entity, with strong institutional backing driving its governance and strategy.
Strategic Updates and Outlook
- Citi Integration: Completed in July 2024, the Citi acquisition added 0.7 million credit cards in Q3 FY25, boosting its card-in-force market share to 14%.
- Digital Leadership: The bank retained its top position in UPI payer PSP (30% share) and grew its merchant acquiring business (20% terminal share).
- Branch Expansion: Axis Bank opened its first branch on an IIM campus (IIM Lucknow) in April 2025, targeting educational institutions.
Axis Bank’s outlook depends on managing asset quality in unsecured loans, sustaining deposit growth, and leveraging digital strengths, though rising provisions and NIM compression remain concerns.
Axis Bank’s business model, blending retail, corporate, and digital banking, positions it as a formidable player in India’s financial sector, though it faces challenges from slippages and funding costs. Q3 FY25 earnings show a modest 4% profit rise, tempered by higher provisions and muted NII growth. The promoter group’s reduced 7.91% stake in the shareholding pattern highlights its institutional-driven structure, with robust FII and DII participation. Stakeholders must assess Axis Bank’s ability to balance growth with risk management in a competitive landscape.
Disclaimer
The information in this article is based on publicly available data as of April 05, 2025, sourced from regulatory filings, company announcements, and credible reports. It is intended for informational purposes only and does not constitute financial advice, investment recommendations, or an endorsement of Axis Bank Limited. Readers should conduct their own research and consult financial professionals before making investment decisions. The author and publisher are not liable for any errors, omissions, or outcomes resulting from the use of this information.
