Axis Bank-Citi deal likely to be completed by Q4FY23, says MD Amitabh Chaudhry

Amitabh Chaudhry, MD & CEO, Axis Bank (Image: PTI)

Axis Bank’s deal to acquire the consumer business of Citibank India will be completed by the fourth quarter of this financial year, managing director and chief executive officer Amitabh Chaudhry said on July 25.

“On the Citibank consumer business integration, we are awaiting CCI (Competition Commission of India) approval, and we expect to close the transaction by the fourth quarter of fiscal 2023,” Amitabh Chaudhry said at a conference call after the private lender’s April-June quarterly results.

Chaudhry said that Axis Bank cannot engage with Citi “extensively” till it gets the CCI approval, which was expected within six to eight weeks. However, the bank was working on integrating people, technology and business operations, he added.

Also read: Axis Bank Q1 Results | Net profit jumps 91%, beats estimate

In March, Axis Bank acquired Citibank's India consumer business for $1.6 billion in an all-cash deal. The transaction comprised the sale of consumer banking businesses of Citibank India, which include credit cards, retail banking, wealth management and consumer loans.

Axis Bank had said the deal would increase its credit-card customer base by around 31 percent with an additional 2.5 million cards.

The merger date would be when Axis Bank will take over the deposits and the assets of Citibank. Axis Bank does have the right to use the ‘Citi’ name for a certain period of time, Chaudhry said on July 25. Eventually, the bank’s plan is to provide the same experience to Citi consumers in the “same shape and form as before”, he added.

Q1 results

Axis Bank on July 25 reported a 91 percent year-on-year rise in net profit at Rs 4,125 crore for the quarter ended June, topping analysts' expectations of Rs 3,597.7 crore.

Despite robust net profit growth, the bank's operating profit fell 5 percent from a year ago owing to operating expenses growth of 34 percent and treasury losses. Core operating profit excluding trading income showed a growth of 17 percent year-on-year and 5 percent sequential growth, driven by resilient fee income growth.

Also read: Axis Bank Q1 results | Here are top five highlights of a healthy quarter

The private sector lender reported a 21 percent rise in net interest income to Rs 9,384 crore, exceeding Street's estimate of Rs 9,186.6 crore.

Loan growth was broad based, with retail loans growing 25 percent year-on-year and the corporate loan book growing faster by 27 percent.

The surge in net profit was also driven by a sharp drop in provisions to Rs 359 crore for the reported quarter from Rs 3,302 crore in the corresponding quarter of the previous year. Specific loan loss provisioning was down to Rs 777 crore from Rs 2,865 crore a year ago. This was because the pile of gross non-performing assets fell by 39 percent year on year.

Gross bad loans were just 2.76 percent of the bank's loan book, down from 3.85 percent a year ago and 2.82 percent the quarter before. On a net basis, non-performing loans slipped below 1 percent of the loan book to 0.64 percent. 

Axis Bank’s chief financial officer Puneet Sharma did not give any guidance on credit growth but said the lender aims to grow faster than the industry.

In terms of margins, Sharma did not guide whether the bank was targeting 4 percent levels like its peers.  The lender's net interest margin (NIM) expanded 14 bps YoY to 3.60 percent in the June quarter and was up 11 bps sequentially.

“What we have categorically stated is that we have a NIM-bridging exercise that we fundamentally are undertaking,” Sharma added.