Axis Bank Limited — Credit Ratings, 20-11-2024: Credit Rating

CRISIL Ratings has assigned a 'CRISIL AA+/Stable' rating to Axis Bank's Rs 2000 crore Tier I Bonds (Under Basel III). The ratings on various other instruments have been reaffirmed at 'CRISIL AAA' and 'CRISIL AA+/Stable'.

Key strengths include a solid capital position with a Tier-I capital adequacy ratio of 14.5% as of September 30, 2024, up from 14.2% in March 2024. Axis Bank's total net worth has grown to Rs 1,65,629 crore, enhancing its ability to manage credit growth and mitigate risks associated with non-performing assets (NPAs), with a net worth to net NPA ratio improving significantly to 45.8 times.

However, the bank's average asset quality remains a concern, with gross NPAs at 1.44% as of September 30, 2024. While the trend is improving, delinquencies in unsecured retail segments could pose risks ahead. Operating efficiency is reflected in a liquidity coverage ratio of around 115% and a focus on low-cost deposits, exemplified by a CASA ratio of 41%.

Given the strong capitalization and healthy resource profile, the outlook for Axis Bank remains stable. Investors might consider this as a potential buy opportunity, balanced against the asset quality risks in retail segments.