Retail advances will drive growth this fiscal: Axis Bank

Retail lending, which has seen strong demand in recent months, is likely to continue driving growth this year for Axis Bank. The private-sector lender also expects unsecured lending to pick up pace in the second half of the fiscal.

“The contribution of retail has been inching up in the overall share of our book. My sense is that, given the kind of strong demand, we will see corporate demand return from the fourth quarter of the fiscal year; but retail will be pretty much the driver of growth this year,” said Sumit Bali, Group Executive and Head–Retail Lending, Axis Bank.

The bank reported a 10 per cent growth in advances on a year-on-year basis, as on September 30, 2021.

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Bali noted that much of this was led by retail and agri lending.

Corporate advances increased by one per cent on an annual basis, as on September 30, 2021, compared to an 18 per cent growth in advances to small and medium-sized enterprises (SME) and 16 per cent increase in retail lending. Retail advances accounted for 56 per cent of its net advances, as on September 30, 2021, with the share of secured retail loans at about 80 per cent.

“As part of our retail lending strategy, we were biased towards the secured side of the business for the first six months. From now on, the unsecured side would be growing faster. My sense is that, while secured will keep growing, the pace of growth for unsecured will be faster from here on,” Bali told BusinessLine.

October was a good month for the bank with record spends — almost 40-45 per cent higher than the level in March 2021.

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Segments like business instalment loans and personal loans are back to pre-Covid levels while credit card spending has also been increasing on a month-on-month basis.

“In small business banking — which is the secured side of business and [where] our exposure is upto ₹1 crore — utilisation, which had fallen to sub-50, got closer to 60 per cent. That is a good sign,” he said.

He also said stress in the retail book was moderating.

“Delinquencies are moderating. The spike was sharp in May and June, and the reduction is equally sharp. Month-on-month, we are seeing 25-40 basis points being shaved off from the delinquency level and the net GNPA [gross non-performing assets] flow is down to virtually nil,” he said.