Axis Bank's Q1FY27 Media Conference Call

Thank you Michelle. We welcome you all to a discussion on Access Bank's financial results for the quarter ended June 2026. We have on the call our ED Subramanian, Manish Sharda, Nidh Gambhir, our CFO Punit Sharma and other members of the leadership team. While the global macroeconomic environment stays fragile and susceptible to geopolitical and trade related uncertainties, intermittent moderation energy prices and normalization of supply chains are keeping sentiment like where it was when we reported our quarter 4 financial 26 results. India meanwhile continues to stand out as one of the fastest growing major economies. The country has navigated recent geopolitical disruptions with notable resilience underpinned by robust consumption, strong investment activity and the government sustained focus on infrastructure and capital expenditure. In this favorable yet evolving macro environment, Access Bank remains steadfast in its commitment to build a stronger more resilient franchise. We continue to deliver quality growth while further strengthening our balance sheet, improving productivity and deepening customer relevance across businesses.

Now, let me talk briefly about the progress we have made on each pillar of our GPS strategy. Starting with growth, our growth momentum remains firmly intact during the quarter as we continue to gain market share across advances and deposits both on a year-on-year and quarter-on-quarter basis. Our total advances grew 19% year-on-year and 2% quarter-on-quarter within which wholesale grew 38%, SME 25%, and retail 8% on year-on-year basis. Retail disbursement trends continue to sustain and remain encouraging supported by our focus on sourcing quality customers, maintaining underwriting rigor and scaling distribution through effective execution across multiple distribution channels. Our theme franchise continues to deliver strong and diversified growth with digital and analytics serving as key enablers of scale. These capabilities are enhancing sourcing, speeding up credit decisions and improving customer experience while supporting disciplined and scalable growth. Wholesale banking growth remains broad-based driven by sectors benefiting from strong transaction flows. Our relationship-led strategy, continued scaling of mid-corporates and conglomerates and deeper one access engagement are enabling us to gain wallet share while steadily improving yields and relationship economics.

Moving on to the deposits, we continue to sustain faster than industry growth as year-on-year on QAB basis, our total deposits grew 18%, term deposits grew 21%, CA grew 13% and savings accounts grew 14% and total CASA deposits grew 13%. Sequential momentum in deposits is also strong on a QAB basis with total deposits growing at 6%, CASA growing at five and term deposits growing at 7%. FCRB Deposit is extracting strong interest from NRI customers and we see it as a meaningful opportunity to augment our deposit base through our NRI franchise and our proactive outreach to banks across overseas markets. Our cost of funds declined by 35 basis points year and two basis points quarter-on-quarter. Our efforts remain focused on further strengthening the deposit franchise through increased generalization and a more stable liquidity mix supporting a resilient and well-diversified funding base.

We continue to see strong momentum in both customer acquisition and engagement. Our new-to-bank franchise is scaling with improving quality improvisation evidenced by an 18% year-on-year increase in new-to-bank average balances. The corporate salary segment continued to be a strong growth driver with 30% year-on-year increase in average NDV balance in salary accounts while the existing-to-bank salary book also grew at 18% year-on-year reflecting continued deepening of our corporate salary franchise and customer deepening. Burgundy continues to be a key driver of premisation with assets under management up 20% year-on-year and 11% quarter-on-quarter including AUM for Burgundy private up 16% year-on-year and 12% quarter-on-quarter. The strength and consistency of our proposition was further recognized with Burgundy private being honored at PWT awards 2026.

Our focus on profitability has been on building a more sustainable earnings profile driven by disciplined execution, operating leverage and ongoing efficiency gains. Our NIM for first quarter at 3.46 is our cycle bottom with the FCNRB deposits opportunity in the near term. We will focus on growth and deployment of the additional liquidity raised through this route. Our cost to assets declined further to 2.2%, down 21 basis points year-on-year and eight basis points quarter-on-quarter. So continued improvement in operational productivity for the quarter. Our consolidated ROA was 1.56% and ROE was 14.52%. On sustainability, we stay focused on quality balance sheet resilience, building future-ready technology platforms and investing in people and capabilities to deliver sustainable outcomes at scale. Our GPA was at 1.28%, declining 29 basis points year-on-year and NNPA at 0.39%, declining six basis points year-on-year. While the net credit cost was at 0.63%, down 75 basis points year-on-year.

We successfully raised US dollar 600 million in additional tier 1 and US dollar 300 million in senior debt instruments, further strengthening our capital position and funding profile. The 81 saw interest from high-quality long investors. The transactions reinforce our current standing and enhances financial flexibility. We introduce regular updates on our AI transformation journey last quarter, reflecting the growing role of AI across the franchise. Please refer to slides 13 and 14 for details on the progress made. Axiom, our enterprise AI operating model, is designed to systematically embed AI in the functioning of the bank by adopting a capability platform-led approach. The core idea is simple: build capabilities once, govern them centrally, and deploy them many times across the enterprise. This will enable us to create reusable AI assets that can be leveraged across businesses, functions, products and customer journeys, driving consistency, speed and scale. Our investments in digital AI and innovation continue to gain industry recognition. During the quarter, we were named the best digital bank at the Financial Express India's Best Bank awards, won the best AI-driven customer experience initiative at the 14th digital customer experience awards 2026, and received the platinum award at the Infosys finical innovation awards 2026 for leveraging next-generation technologies to drive innovation in corporate banking. These accolades reinforce the progress we are making in building a technology-led customer-centric franchise. At the heart of our strategy continues to be a relentless focus on customers through our customer obsession initiative spar. We are leveraging digital capabilities, analytics and AI to simplify journeys, enhance service outcomes and build deeper, more meaningful customer relationships. Our digital enablers are now helping consistently enhance customer interactions through AI and CX platforms. RDR internal AI engine handled 7.44 lakh queries while 30.9 lakh customer interactions were enabled through collidoscope during the quarter. We remain watchful of evolving alternatives including the potential implications of El Nino on the macro. We are confident in the strength and resilience of the franchise we have built. With a robust balance sheet, disciplined risk culture and a diversified growth engine, we are well positioned to capitalize on opportunities and deliver sustainable growth that outpaces the industry. With that, I will now hand over to Punit to discuss the financial performance for the quarter.

Thank you Shivam for the question. I think you're referencing Q1 versus Q4. There is seasonality for the agri portfolio in Q1 that doesn't exist in Q4. If you look at Q1 last year to Q1 this year, our performance on slippages has been significantly better than where we were. Our gross slippage ratio stands at 1.79% in the current quarter and it's lower by 134 basis points compared to same period last year. So Q1 and Q1 are apples to apples comparison and we have improved asset quality meaningfully from that period.

As I've stated in my remarks, we believe this is the cycle bottom as far as NIMs are concerned. So we are hopeful that from here on you will see the NIM journey moving in the right direction. Obviously we have also stated that FCNRB deposits give us an opportunity which could be large and very different in terms of huge amount of liquidity could come to the system and it could provide growth opportunities or give us opportunities to pay down some liabilities. We'll see how that plays out. So we have maintained our stance and at the same time I'm just saying that there is an opportunity which is being presented to everyone as we speak. Depending on how much we are able to raise, we will decide our strategy accordingly in terms of how do we deploy that additional liquidity which was not planned for when we started this financial year.

Thank you for the question. I don't think we've said we've not commented on whether FCNRB is dilutive or accretive to margin. I think our comments are limited to the fact that the liquidity that gets generated through the FCNRB deposits will get deployed towards growth. We will look at what opportunities present themselves for growth and deploy that liquidity there too. In terms of quantum of FCNRB deposits, we would prefer not to comment on the quantum. I think what we've previously said on FCNRB is as a franchise, we are comfortable stating that our market share will be higher than our organic market share. That's the comfort that we have. That's all that we would like to state at the moment. Please allow us to report actual performance at the end of quarter 2 which will then be a fair comparison of where market stands.

Yeah. Hi. So you know those are decisions that we'll take on a transaction-by-transaction basis. There is no overall view on what leverage how much will we allow as Punit just mentioned. It's been only a month. Some of the clarifications came a couple of weeks back. During the course of this quarter, we'll do the mobilization based on what is best for our franchise and we'll come back to you at the end of the quarter based on actual performance in terms of both leverage as well as the total mobilization that we've done. So I would advise all of you to look at not just one parameter. I mean you have to look at leverage, you have to look at the rate at which the lending is being done, you have to look at what is the base deposit rate. I think when people pick up just one parameter and start quoting it as if some miracle is happening, I think that can be avoided. Every parameter has to be looked at and finally you have to look at the overall return being given to the customer. So it's an evolving space. So there is no point in speculating on what, where, how, how much etc. Thank you.

Just second, I just want to use the opportunity to thank Punit for working and serving Access Bank for the last six years. So beautifully, I think he has created a reputation for himself in the marketplace and he is moving on to a bigger institution. We wish him the very best and I'm hoping that he'll remain an ambassador of Access wherever he goes. Thank you Punit, thanks a lot.