WORKING MANAGEMENT OF AXIS BANK

By: Patel Sejal

To: R. M. prajapati

PREFACE
I have prepared an analytical report on Working Capital Management of AXIS BANK. In compiling this report I have taken into account, opinions and comments from the account holder and bank. I thank them for their time. I hope the users of this report would feel that I have done justice to it.

I feel that there is always a scope of improvement and I would appreciate suggestions from readers.

INDEX
SERIAL NO. 1. Chapter-1: An Insight To The Bank
Executive Summary, Introduction, Achievements, Mission, Values, Current Situation, Types of Accounts, Information, Advertising and Marketing, Board of Directors, Capital and Reserves, Corporate Governance, Statutory Disclosure, Auditors

PARTICULARS

PAGE NO.

5-20

2.

Chapter2: Overview of Financial and Business Performance

Capital Management, Retail Banking, Corporate Banking, Treasury, Business Banking, Cash Management, Capital Market, International Banking, Credit Risk Management, Corporate Social Responsibility

21-37

3. 4. 5. 6. 7. 8.

Chapter3: Industry Analysis Chapter-4: Performance Summary Chapter-5: SWOT Analysis Chapter-6: Ratio Analysis Chapter-7: Findings Chapter-8: Bibliography

38-39 40-42 43-44 45-57 58 59

CHAPTER-1 AN INSIGHT TO THE BANK

EXECUTIVE SUMMARY
This project was undertaken to analyze all the sectors of company, to find out the position in banking industry and compare it with other major bank in banking sector. This project is being made in order to understand the position of Axis Bank in India. Following are the goals of this project: To understand the strategies of bank. To understand the banking industry. To understand the companys functions. To suggest ways for improving the market share, profit margin. To make an effective advertising campaign. This report is divided into various parts according to the objective of the project: 1. The first part of the project deals with an overview of company. 2. The second part of the project deals with analysis of Company (Financial Analysis, Competitor analysis, Industry Analysis, SWOT Analysis & Ratio Analysis).

INTRODUCTION ABOUT AXIS BANK

COMPANY PROFILE

Type Traded as

: :

Private BSE 532215 LSE AXBC NSE AXISBANK

Industry Key people Products

: : :

Banking, Financial service Mumbai, Maharasthra, India Adarsh Kishore (chairmain) Shikha Sharma (MD&CEO) Credit Cards, Consumer Banking, Corporate Banking, Finance and Insurance, Investment Banking, Mortgage Loans, Private Banking, Private Equity, Wealth Management

Headquarter :

Revenue Net income Total assets Employees Website

: : : : :

198.26 billion (US$3.96 billion) 33.44 billion (US$667.13 million) 2.42566 trillion (US$48.39 billion) 21,640(2010) www.axisbank.com

AXIS Bank was the first of the new private banks to have begun operations in 1994, after the Govt. Of India allowed new private banks to be established. The bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of india(SUUTI), LIC and General Insurance Corporation Ltd and other four PSU companies i.e. National Insurance Company Ltd, The New India Assurance Company, The Oriental Insurance Corporation and United Insurance Company Ltd. The bank as on 31st march, 2012 is capitalized to the extent of Rs 413.20 crores with the public holding (other than promoters and GRDs) at 54.08%. The bank registered office at Ahmadabad and its Central Office is located at Mumbai. Presently the bank has a very wide network of more than 1622 branches( as on 31 st march, 2012).The bank has a network of over 9924(as on 31st march,2012) ATMs providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM networks in the country. The bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence. The present shareholding pattern of axis bank is given below. Administrator of the specified undertaking of the UTI Life Insurance Corporation of India GIC and four PSU Insurance Companies Non-promoter Indian Shareholding Non-promoter Foreign Shareholding 23.57% 9.80% 4.17% 21.86% 40.60%

HISTORY OF AXIS BANK

1993:
The Bank was incorporated on 3rd December and Certificate of business on 14th December. The Bank transacts banking business of all description. UTI Bank Ltd. was promoted by Unit Trust of India, Life Insurance Corporation of India, General Insurance Corporation of India and its four

subsidiaries. The bank was the first private sector bank to get a license under the new guidelines issued by the RBI.

1997:
The Bank obtained license to act as Depository Participant with NSDL and applied for registration with SEBI to act as `Trustee to Debenture Holders'. Rupees 100 crores was contributed by UTI, the rest from LIC Rs 7.5 crores, GIC and its four subsidiaries Rs 1.5 crores each.

1998:
The Bank has 28 branches in urban and semi urban areas as on 31 st July. All the branches are fully computerized and networked through VSAT. ATM services are available in 27 branches. The Bank came out with a public issue of 1,50,00,000 No. of equity shares of Rs 10 each at a premium of Rs 11 per share aggregating to Rs 31.50 crores and Offer for sale of 2,00,00,000 No. of equity shares for cash at a price of Rs 21 per share. Out of the public issue 2,20,000 shares were reserved for allotment on preferential basis to employees of UTI Bank. Balance of 3,47,80,000 shares were offered to the public. The company offers ATM cards, using which account-holders can withdraw money from any of the bank's ATMs across the country which is inter-connected by VSAT. UTI Bank has launched a new retail product with operational flexibility for its customers. UTI Bank will sign a co-brand agreement with the market, leader, Citibank NA for entering into the highly promising credit card business. UTI Bank promoted by India's pioneer mutual fund Unit Trust of India along with LIC, GIC and its four subsidiaries.

1999:
UTI Bank and Citibank have launched an international co-branded Credit card. UTI Bank and Citibank have come together to launch an international co-branded credit card under the MasterCard

umbrella. UTI Bank Ltd has inaugurated an offsite ATM at Ashok Nagar here, taking the total number of its offsite ATMs to 13.m

2000:
The Bank has announced the launch of Tele-Depository Services for Its depository clients. UTI Bank has launch of `iConnect', its Internet banking Product. UTI Bank has signed a memorandum of understanding with equitymaster.com for e-broking activities of the site. Infinity.com financial Securities Ltd., an e-broking outfit is Typing up with UTI Bank for a banking interface. Geojit Securities Ltd, the first company to start online trading services, has signed a MoU with UTI Bank to enable investors to buy\sell demat stocks through the company's website. India bulls have signed a memorandum of understanding with UTI Bank. UTI Bank has entered into an agreement with Stock Holding Corporation of India for providing loans against shares to SCHCIL's customers and funding investors in public and rights issues. ICRA has upgraded the rating UTI Bank's Rs 500 crore certificate of deposit programmed to A1+. UTI Bank has tied up with L&T Trade.com for providing customized online trading solution for brokers.

2001:
UTI Bank launched a private placement of non-convertible debentures to rise up to Rs 75 crores. UTI Bank has opened two offsite ATMs and one extension counter with an ATM in Mangalore, taking its total number of ATMs across the country to 355. UTI Bank has recorded a 62 per cent rise in net profit for the quarter ended September 30, 2001, at Rs 30.95 crore. For the second quarter ended September 30, 2000, the net profit was Rs 19.08 crore. The total income of the bank during the quarter was up 53 per cent at Rs 366.25 crore.

2002:
B Paranjpe & Abid Hussain cease to be the Directors of UTI Bank.UTI Bank Ltd has informed that in the meeting of the Board of Directors following decisions were taken: Mr Yash Mahajan, Vice

Chairman and Managing Director of Punjab Tractors Ltd were appointed as an Additional Director with immediate effect. Mr N C Singhal former Vice Chairman and Managing Director of SCICI was appointed as an Additional Director with immediate effect. ABN Amro, UTI Bank in pact to share ATM. UTI Bank Ltd has informed BSE that a meeting of the Board of Directors of the Bank is scheduled to be held on October 24, 2002 to consider and take on record the unaudited half yearly/quarterly financial results of the Bank for the half year/Quarter ended September 30, 2002. UTI Bank Ltd has informed that Shri J M Trivedi has been appointed as an alternate director to Shri Donald Peck with effect from November 2, 2002.

2003:
UTI Bank Ltd has informed BSE that at the meeting of the Board of Directors of the company held on January 16, 2003, Shri R N Bharadwaj, Managing Director of LIC has been appointed as an Additional Director of the Bank with immediate effect.- UTI Bank, the private sector bank has opened a branch at Nellore. The bank's Chairman and Managing Director, Dr P.J. Nayak, inaugurating the bank branch at GT Road on May 26. Speaking on the occasion, Dr Nayak said. This marks another step towards the extensive customer banking focus that we are providing across the country and reinforces our commitment to bring superior banking services, marked by convenience and closeness to customers. -UTI Bank Ltd. has informed the Exchange that at its meeting held on June 25, 2003 the BOD have decided the following: 1) To appoint Mr. A T Pannir Selvam, former CMD of Union Bank of India and Prof. Jayanth Varma of the Indian Institute of Management, Ahmedabad as additional directors of the Bank with immediate effect. Further, Mr. Pannir Selvam will be the nominee director of the Administrator of the specified undertaking of the Unit Trust of India (UTI-I) and Mr. Jayanth Varma will be an Independent Director. 2) To issue Non-Convertible Unsecured Redeemable Debentures up to Rs.100 crs, in one or more tranches as the Bank's Tier - II capital. -UTI has been authorized to launch 16 ATMs on the Western Railway Stations of Mumbai Division. -UTI filed suit against financial institutions IFCI Ltd in the debt recovery tribunal at Mumbai to recover Rs.85cr in dues. -UTI bank made an entry to the Food Credit Programme; it has made an entry into the 59 cluster which includes private sector, public sector, old private sector and co-operative banks. -Shri Ajeet Prasad, Nominee of UTI has resigned as the director of the bank.

Banks Chairman and MD Dr. P. J. Nayak inaugurated a new branch at Nellore.-UTI bank allots shares under Employee Stock Option Scheme to its employees. -Unveils pre-paid travel card 'Visa Electron Travel Currency Card' -Allotment of 58923 equity shares of Rs 10 each under ESOP. -UTI Bank ties up with UK govt fund for contract farm in -Shri B S Pandit, nominee of the Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I) has resigned as a director from the Bank wef November 12, 2003. -UTI Bank unveils new ATM in Sikkim.

2004:
Comes out with Rs. 500 mn Unsecured Redeemable Non-Convertible Debenture Issue, issue fully subscribed -UTI Bank Ltd has informed that Shri Ajeet Prasad, Nominee of the Administrator of the Specified Undertaking of the Unit Trust of India (UTI - I) has been appointed as an Additional Director of the Bank w. e. f. January 20, 2004.-UTI Bank opens new branch in Udupi-UTI Bank, Geojit in pact for trading platform in Qatar -UTI Bank ties up with Shriram Group Cos -Unveils premium payment facility through ATMs applicable to LIC UTI Bank customers Metal junction (MJ)- the online trading and procurement joint venture of Tata Steel and Steel Authority of India (SAIL)- has roped in UTI Bank to start off own equipment for Tata Steel. -DIEBOLD Systems Private Ltd, a wholly owned subsidiary of Diebold Incorporated, has secured a major contract for the supply of ATMs an services to UTI Bank -HSBC completes acquisition of 14.6% stake in UTI Bank for .6 m -UTI Bank installs ATM in Thiruvananthapuram -Launches Remittance Card' in association with Remit2India, a Web site offering money transfer services.

2005:
UTI Bank enters into a banc assurance partnership with Bajaj Allianz General for selling general insurance products through its branch network. -UTI Bank launches its first Satellite Retail Assets Centre (SRAC) in Karnataka at Mangalore.

2006:
UBL sets up branch in Jaipur -UTI Bank unveils priority banking lounge.

MISSION VISION AND VALUES

10

MISSION: Customer service and product innovation turned to diverse needs of individual and corporate client. Continuous technology up gradation while maintaining human values. Progressive globalization and achieving international standards. Efficiency and effectiveness built on ethical practices.

VISION 2015:To be the preferred financial solution provider excelling in customer delivery through insight, empowered employees and smart use of technology.

CORE VALUES: Customer centricity Ethics Transparency Teamwork Ownership

CURRENT SITUATION OF THE BANK

11

Today, more than a century after those tentative first steps, AXIS BANK fairy tale is not only going strong but blazing new standards, and that minuscule initial investment has grown by leaps and bounds to crores of rupees in wealth for AXIS BANK shareholders. The companys offerings are spread across the spectrum with service. Having succeeded in garnering the trust of almost onethird of Indias one billion populations and a strong management at the helm means axis will continue to dream big on its path of innovation. And millions of customer will savour the results, happily ever after.

TYPES OF DEPOSIT ACCOUNTS

While various deposit products offered by the Bank are assigned different names. The deposit products can be categorised broadly into the following types. "Demand deposits" means a deposit received by the Bank which is withdraw able on demand. "Savings deposits" means a form of demand deposit which is subject to restrictions as to the number of withdrawals as also the amounts of withdrawals permitted by the Bank during any specified period. " Term Deposit" means a deposit received by the Bank for a fixed period withdraw able only after the expiry of the fixed period and include deposits such as Recurring/Reinvestment Income Certificate/ Encash 24/Short term Deposits/ Fixed Deposits/ Monthly Income Certificate/ Quarterly Income Certificate etc. "Current Account" means a form of demand deposit wherefrom withdrawals are allowed any number of times depending upon the balance in the account or up to a particular agreed amount and will also include other deposit accounts which are neither Savings Deposit nor Term Deposit.

INFORMATION
12

Helping you to choose products and services, which meet your needs? Before you become a customer, AXIS will: Give you clear information explaining the key features of the services and products. Give you information on any type of account facility which we offer and may suit your needs Tell you what information we need from you to prove your identity and address and to comply with legal and regulatory requirements, and request for additional information about you and your family to build a database but such information can be furnished by you only if you wish and we will not compel you to give this information for opening your account. Axis will tell you if we offer products and services in more than one way [for example, through ATMs on the internet, over the phone, in branches and so on] and tell you how to find out more about them. Once you have chosen an account or service, we will tell you how it works. When you open a single account or a joint account, we will give you information on your rights and responsibilities. We recommend that you avail nomination facility offered on all deposit accounts, articles in safe custody and safe deposit vaults. We will guide you how we will deal with deposits and other assets held with us in the name of a deceased person in the absence of nomination

ADVERTISING AND MARKETING

13

Axis will make sure that all advertising and promotional material is misleading.

clear, fair, reasonable and not

Axis will seek your specific consent for giving details of your name and address to any third party, including other entities in our group, for marketing purposes. Axis would like to provide you with the entire range of financial services products, some of which are our own products while some others are the products of our group/associate/entities or companies with whom we have tie-up arrangements. Axis will however tell you about our associate / group entities or companies having business tie-up arrangements with us and if you so desire, direct their staff / agents for marketing their products.

14

MANAGEMENT HIERARCHY

CEO EXECUTIVE DIRECTOR

PRESIDENT SENIOR VICE PRESIDENT VICE PRESIDENT ASSISTENT VICE PRESIDENT

SENIOR MANAGER

MANAGER

DM

15

AM

OFFICER

MANAGEMENT PROFILES

16

AWARDS

17

Bank of the year India Best bank- private sector Best bank 2011 Brand excellence award 2011 The most consistent large bank

The banker award 2011 NDTV profit business leadership award Outlook money Star news Best banks 2011 survey by business Today and KPMG

Most preferred bank amongst retail consumers Most productive private sector bank 3rd strongest bank in Asia-pacific region The best domestic bank- India The best domestic bond house-India Best risk master(private sector category) Best bond house India -2011

CLSA survey on personal banking trends FIBAC 2011 banking awards Asian banker The asset triple A country award 2011 The asset triple A country award 2011 FIBAC 2011 banking awards Finance Asia

CAPITAL & RESERVES

18

During the year 2006-07, the Bank has raised capital aggregating Rs. 1,762.81 crores through Innovative Perpetual Debt Instrument (IPDI), eligible as Tier I capital, and Tier II capital in the form of Upper Tier II and subordinated bonds (unsecured redeemable non-convertible Debentures). Of this, the Bank has raised Rs. 389.30 crores by way of subordinated bonds (unsecured redeemable non-convertible debentures) qualifying as Tier II capital, Rs. 307.50 crores by way of Upper Tier II debentures and Rs. 214 crores by way of Hybrid Tier I capital in the form of Innovative Perpetual Debt Instruments. The Bank has further raised US Dollars 150 million (equivalent to Rs. 652.05 crores) as Upper Tier II capital and US Dollars 46 million (equivalent to Rs. 199.96 crores) as Hybrid Tier I capital in the form of Innovative Perpetual Debt Instruments from Singapore under the MTN Programme. The raising of this non-equity capital has helped the Bank continue its growth strategy and has strengthened its capital adequacy ratio. As a result, the Bank is satisfactorily capitalized with the capital adequacy ratio at the end of year being 11.57% compared to 11.08% at the end of the preceding year (and as against a minimum regulatory requirement of 9% CRAR). Of this, Tier I capital constituted 6.42%, while Tier II capital amounted to 5.15%. During the year under review, 29, 40,060 equity shares were allotted to employees of the Bank pursuant to the exercise of options under the Bank's Employee Stock Option Plan. The paid up capital of the Bank as on 31 March 2007 thereby rose to Rs. 281.63 crores from Rs. 278.69 crores as on 31 March 2006 .The Bank's shares are listed on the NSE, the BSE, the Ahmedabad Stock Exchange and the OTCEI. The GDRs issued by the Bank are listed on the London Stock Exchange (LSE). The Bonds issued by the Bank under the MTN programme are listed on the Singapore Stock Exchange. The listing fee relating to all stock exchanges for the current year has been paid. With effect from 26 March 2001, the shares of the Bank have been included and traded in the BSE the diluted Earning per Share (EPS) of the Bank for 2006-07 has risen to Rs. 22.79 from Rs. 17.08 last year. In view of the overall performance of the Bank and the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy capital adequacy ratio to support future 19

growth, the Board of Directors has recommended a higher dividend rate of 45% on equity shares, compared to the 35% dividend declared for the financial year 2005-06.

CORPORATE GOVERNANCE
The Bank is committed to achieving a high standard of corporate governance and it aspires to benchmark itself with international best practices. The corporate governance practices followed by the Bank are enclosed as an Annexure to this report.

STATUTORY DISCLOSURE
Considering the nature of activities of the Bank, the provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to the Bank. The Bank has, however, used information technology extensively in its operations. The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the rule made there under, is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank.

AUDITORS
M/s S. R. Batliboi & Co., Chartered Accountants, statutory auditors of the Bank since 2006 retire on the conclusion of the Thirteenth Annual General Meeting and are eligible for re-appointment, subject to the approval of Reserve Bank of India, and of the shareholders. As recommended by the Audit Committee, the Board has proposed the appointment of S.R. Batliboi & Co., Chartered Accountants as statutory auditors for the financial year 2007-08. The shareholders are requested to consider their appointment.

CHAPTER-2
20

OVERVIEW OF FINANCIAL AND BUSINESS PERFORMANCE

During the year 2006-07, the Bank has witnessed a strong growth in business volumes as well as profits, with the net profit increasing by 35.86% to Rs. 659.03 crores from Rs. 485.08 crores the previous year. The total income of the Bank rose by 53.95% to Rs. 5,570.52 crores from Rs. 3,618.42 crores the previous year. During the same period, the operating revenue increased by 42.55% to Rs. 2,577.19 crores, while operating profit increased by 37.11% to Rs. 1,362.60 crores. On 31 March 2007, the Bank's total assets increased by 47.31% to Rs.73, 257 crores. The total deposits of the Bank grew by 46.55% to Rs.58, 786 crores, while the total advances grew by 65.26% to Rs. 36,876crores. The total demand deposits (savings bank and current account deposits) have increased by 46.11% to Rs. 23,430.19 crores, constituting39.86% of total deposits. The Bank has increased its market share of aggregate deposits in All Scheduled Commercial Banks (ASCB), which rose from 1.76% as on 31 March 2006 to 2.08% on 30 March 2007, while its share of advances rose from 1.50% to 1.78% during the same period. In the financial year 2006-07, the Bank's incremental market share of aggregate deposits in ASCB was 3.39% while its incremental share in advances was 2.75%. The solid performance of the Bank despite higher provisioning on standard assets, increase in risk weights on select asset classes, reduction on interest paid on CRR and a hardening of interest rates due to tightening of the overall liquidity situation underscores the efficacy of the business model adopted by the Bank. The Bank continued to enhance shareholder value and the diluted earnings per share for the year 2006-07 increased to Rs. 22.79 from Rs. 17.08 the previous year. As on 31 March 2007, the book value per share of the Bank has increased to Rs. 120.50 from Rs. 103.06 as on 31 March 2006.

21

The Bank will continue to derive benefit from the infrastructure created. Over the years and will continue to pursue a strategy of profitable growth through stronger corporate relationships and an accelerated retail customer expansion programmed driven by the Bank's multiple channels. In 200708, the Bank's strategy will continue to revolve around further increasing its market-share in the expanding financial services industry and to become an International Bank with a pan-Asia presence. The Bank will continue to emphasize growth opportunities through higher Levels of customer satisfaction and loyalty, and deepening relationships with existing customers. It seeks to maintain and enhance a strong retail and corporate franchise, strengthen the structures and delivery channels for increasing SME and agricultural businesses, exploit cross-sell opportunities, offer private banking for high-net worth customers, consolidate new business initiatives such as Credit Cards, Wealth Management and Banc assurance for Life Insurance, and encase opportunities through overseas offices for cross-border trade finance, syndication of debt and NRI business development.

The Bank will continue to focus on high-quality earnings growth through an emphasis on core income streams such as NII and fee-based income and on maintaining a high standard of asset quality by providing emphasis on rigorous risk-management practices. The Bank will continue to use Technology extensively to maintain competitive advantage and continue to up-grade the technology platform to provide leverage for bringing in higher cost efficiencies.

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CAPITAL MANAGEMENT
The Bank strives for the continual enhancement of shareholder value. Its capital management framework helps to optimise the use of capital by ensuring the right composition of capital in relation to business growth and the efficient use of capital through an optimal mix of products and services.During the year, the Bank continued to attract investor interest from domestic and foreign institutional investors, with a sizeable increase in trading volume and price. During 2006-07, the Bank has raised capital aggregating Rs. 1,762.81 crores through Innovative Perpetual Debt Instrument (IPDI), eligible as Tier I capital and Tier II capital in the form of Upper Tier II and subordinated bonds (unsecured redeemable nonconvertible debentures). Of this, the Bank has raised US Dollars 196 million (equivalent to Rs. 852.01 crores) by way of Hybrid Tier I capital and Upper Tier II capital from Singapore under the MTN Programme. This additional capital enabled the Bank to reinforce its growth strategy and shore up its capital adequacy ratio. Consequently, as on 31 March 2007, the Bank's capital adequacy ratio rose to 11.57% from 11.08% last year. 23

The following table sets forth the risk-based capital, risk-weighted assets and capital adequacy ratios computed in accordance with the applicable RBI guidelines 20. The Bank has always focused on innovation and differentiation. In this direction, during the year, the Bank has opened specialised Priority Banking branches for the high networth customer segment. Priority Banking branches have been conceived as a single stop shop for affluent Customers, catering to all their banking and investment needs, and the Bank is the first to launch such a concept in India. These branches are exclusive boutique banking branches with a plush ambience catering to high networth individuals, that takes the Priority Banking product to an experiential level, offering service in a discreet manner while maintaining comfort and confidentiality for the customers. During 2006-07, three such branches were opened in the cities of Pune, Mumbai and Kolkata, with plans to open more such branches at other urban centers in 2007-08. The Bank is very sensitive to the privacy of its customers and does not engage in unsolicited tale-calling. In this regard, the Bank has taken proactive measures to seek positive customer consent on cross-selling initiatives. The Bank launched project 'Sampark', which involves meeting customers face-to-face at branch locations, or outside ATMs and seeking their written consent for cross-selling initiatives. The project is an intensive logistical exercise and by end-March 2007, 8 lacs customer consents have been acquired. This gives the Bank a fully compliant internal database for cross-sell initiatives such as for investment advisory services and insurance products. This will facilitate in boosting the fee income from cross-sell of various products. In its constant endeavour to provide convenience to its customers, the Bank has been aggressively developing its alternative banking channels, namely the ATM network, Internet Banking and Mobile Banking. These channels have received overwhelming response from its customers with registration and transaction figures increasing substantially over the previous year. During the year, the Bank added 450 ATMs, thereby taking the network size to

24

2,341 on 31 March 2007. The Bank offers access to its customers to over 19,000 ATMs across the country through

bilateral and multilateral ATM sharing arrangements. Beginning 2001, the Bank had identified the ATM channel as a strong tool for customer acquisition and convenience. At 4.70 ATMs per branch, the Bank has the highest ATM to branch ratio in the country. The high ATM to branch ratio has been part of the growth strategy and has been a major factor in the high growth of savings bank deposits accounts and balances. Continuing with its efforts in providing the utmost in convenience and safety to its customers, the Bank has promoted its mobile banking services to enable customers to access their accounts on their mobile phones. The service also sends out specific transaction alerts on the mobile phones of registered customers, informing the customer of the activity in the account, thereby giving an added level of safety to the customer. The mobile channel has found increasing acceptance among the Bank's customers. During the financial year, 40% of the incremental customers signed on for mobile banking services. With 1.10 million customers registered for mobile banking, the Bank has among the highest mobile registration penetration levels among bank customers. The Bank is uniquely poised to take advantage of the growth of mobile commerce in the country. On the Internet Banking front, the registered user base of the Bank rose from 1.89 million accounts as on 31 March 2006 to 3.35 million accounts as on 31 March 2007. To give the customers more reliable service, the Internet Banking platform was revamped in the current year. To counter phasing attacks on our customers, the Bank has; Introduced an added security measure whereby the customer has to enter certain additional details from his debit card number in addition to his Login Identification and password for conducting a financial transaction.The Bank has set up a Call Centre, available 24/7, providing assistance in 11 languages. The Call Centre as of March 2007 handled over 20,000 calls per day. With 508 branches, 53 extension counters, 2,341 ATMs, 3.35 million internet banking customers and 1.10 million mobile 25

registered customers, the Bank provides one of the best networks in the country with real time online access to it customers.

RETAIL BANKING
On the retail assets front, for the larger part of the year, retail and consumer lending continued its growth, in spite of the rising interest costs. However, the last quarter saw signs of a slow-down, owing to rising Property prices and interest rates. For the Bank, the year-on-year growth, in business terms, was 38%, growing from Rs. 6,490 crores on 31 March 2006 to Rs. 8,928 corers as on 31 March 2007. This constituted 24.21% of the Bank's total loan portfolio as on 31 March 2007. The Retail Asset Centre (RAC) network of the Bank also grew from 43 to 67 in 2006-07.

During the year under review, the Bank successfully launched its auto loans product and it expects to carve out a significant share in the passenger car financing market in 2007-08. The rise in interest rates in the economy may provoke a certain amount of stress on the portfolio and the Bank is gearing up its machinery to pre-empt any slippage from our present standards, insofar as loan losses are concerned. The Bank further consolidated its position in the Cards business in the country during the year. The Bank today offers a wide array of payment solutions to its customers by way of Debit Cards, Credit Cards, Pre-paid Cards, Cards Acceptance Service and the Internet Payment Gateway. As on 31 March 2007, the total debit card base of the Bank stood at 6 million. The Bank has the third largest debit card portfolio in the country. From the initial one-size-fits-all debit card product, the Bank now offers as many as 7 variants, customized for specific liability customer segments: the Gold Debit Card for the high spenders and the Business Debit Card for current account and SME segment customers launched this year, has found very good acceptance. The Bank also offers travel currency cards in 5 currencies as a convenient alternative to the travelers'

26

cheques. The Bank Also offers Rewards Card, targeted at corporate requirements where recurring payments are required to be made to employees, agents and distributors towards their commissions and incentives. During the year, the Bank launched the Annuity Card, the Meal Card and the Gift Card.

The Annuity Card is a co-branded pre-paid card in association with the Life Insurance Corporation of India for disbursing the annuity/pension payments to the annuitants of LIC. The Meal Card is an electronic variant of the meal vouchers in existence today. The card is the first of its kind in India and will seek to replace the inefficient system of paper-based offerings. The Gift Card is the first free-form card in the country, with a unique gift-wrapped shape. The product seeks to replace cash, cheque, and voucher-based gifts. During the year, the Bank has launched its own Credit Card and over 80,000 cards have since been issued in the year. The Bank started the credit card business with four variants in the Gold and Silver card category. The Bank has launched two co-brands viz. a Store card and a card exclusively for Small Road Transport Operators (SRTOs) in association with Shriram Transport Finance Co. Ltd. The Bank has also introduced "Corporate Cards" backed by a very strong online Travel and Expense Management Solution. The Bank entered the merchant acquiring business in December 2003 and as on 31 March 2007, the Bank had installed over 40,000 Electronic Data Capture (EDC) machines against 21,084 in the previous year. The terminals installed by the Bank are capable of accepting all Debit/Credit MasterCard/ Visa cards & American Express Cards. These terminals come equipped with state-of-the-art technology and have now been enabled for processing smart cards as well. The Bank also offers an Internet Payment Gateway for accepting credit and debit cards on the internet, and is a leading player in e-commerce. The Bank has a significant presence in electronic payment systems of the country and is a major beneficiary of the Increasing number of transactions migrating from cash to electronic forms of payment.

27

One of the focus areas for the Bank during the financial year under review was the distribution of third party products, with a special thrust on mutual funds and Bank assurance. While the Bank consolidated its position in the sales of mutual funds and general insurance during the year, from December 2006 it also started distributing life insurance products through its widespread branch network. The Bank's launch of its life insurance product, in association with MetLife India as

partners, has been very successful. All branches of the Bank were activated within a short span of two months to enable their customers to have access to life insurance products. The year also saw the launch of the On-Line Trading product of the Bank for retail customers. The response to the product has been very positive. Wealth Advisory Services for high networth customers of the Bank were launched during the year in review. Offering a clear product and service advantage, the service is offering wealth advisory for direct equities, mutual funds, insurance, real estate and other value added products. No. of Clients 23 Financial Advisory Services (FAS) for the mass affluent and affluent customers expanded its value added services by providing the customers a single page snapshot of their complete relationship with the Bank including bank balances, deposits, depository holdings marked-to-market, mutual fund investments made through the Bank marked-to- market, RBI Bonds purchased through the Bank and loans taken through the Bank. While the assets under management grew by over 100% during the year, the number of customers for FAS also increased by over 50%.In the last few years, most of the retail segments of the Bank have grown at more than 50% YOY. In order to continue a similar growth pattern in the years to come, the Bank has identified its existing customer base a crucial determinant of future profitability. A key driver of revenue growth and profitability of the Bank in future will be its ability to maximize customer value by effectively marketing additional products and services to existing customers. The Bank has started a separate 'Customer Analytics & Cross Sell' function 28

under Retail Banking to ensure that cross sell is implemented efficiently. The group has to ensure the integrity, accuracy and completeness of customer data, oversee effective customer lead generation (through data mining and analytics), devise a lead tracking mechanism and monitor the leads across channels and various customer touch points made available by the Bank.

CORPORATE BANKING
Corporate Banking business of the Bank provides quality products to large and mid-sized clients. The products include credit, trade finance for domestic as well as international transactions, structured finance, and project finance and syndication services. The Bank continues to pursue a two-pronged strategy of widening the customer base as well as deepening existing client relationships. Careful choice of new customers based on appropriate risk-

29

return guidelines forms the basis for the strategy of widening the customer base. The deepening of existing client relationships is achieved by a careful account strategy focusing on increasing the cross-sell of various corporate banking products, as also products from other divisions of the Bank including investment banking and retail products. During the year, large corporate advances grew by 76% to Rs. 16,346 crores from Rs. 9,286 crores in the previous year. The Bank took steps to focus on fee income mainly from trade finance facilities and document handling. This method of fee generation is stable and sustaining. Given the Increasing overseas presence of the Bank, the trade finance business is set to grow significantly over the coming years. The Bank takes selective Exposure to project financing in areas of infrastructure as well as manufacturing projects set up by reputed industry groups. It constantly works to upgrade its skills in financial structuring to be able to continue providing value to its corporate customers. The overseas presence has enabled the Bank to leverage its existing relationships further by granting loans towards ECBs by Indian corporate as well as to enable acquisition financing. The Bank has also contributed towards financing infrastructure projects and other forms of project finance through its overseas branches. Channel finance also grew on the back of strong corporate demand. The centralised Channel Finance Hub continued to deliver seamless service to various channel finance customers. Syndication and underwriting of corporate debt also increased in volumes and resulted in rising fee income. Corporate Banking increased its focus on Risk Management and on improving portfolio quality. The identification, measurement, monitoring, management and pricing of client risk are the key activities that enable all corporate banking business. The Bank has in place procedures and practices to ensure regular updation of risks taken by the Bank on various client accounts. Portfolio diversification remains the key for managing asset quality and preventing concentration risks. The credit risk in corporate banking is evaluated and managed by groups organized with an industry sector focus. The Bank also has a Risk Management Department, whose views are critical for decision-making with regard to credit exposures. Overall, the risk control mechanism adopted by the Bank has continued to serve the Bank well, as is observed in the ratio of net NPA to net customer assets being at 0.61%. Corporate Banking scrupulously adheres to all statutory, regulatory and related guidelines for all its businesses.

TREASURY
30

The integrated Treasury manages the global funding of the balance sheet, domestic and foreign currency resources of the Bank, compliance with statutory reserve requirements, as well as optimizes on opportunities in the markets through managing proprietary positions in foreign exchange and interest rate markets. With the expansion of the Bank overseas, the Treasury will look to leverage on the network to widen product scope as well as increase revenue generation from opportunities in the global markets. The continued thrust on maximizing returns from customer relationships in the Treasury has resulted in growth of 51% in customer exchange turnover and 60% in revenues. The Treasury offered structured solutions to customers using foreign exchange and derivatives offerings, which has resulted in significant value addition to customer relationships. In its continued effort to offer top of the line payment solutions to customers, the Bank has offered Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) through 470 branches and extension counters across the country. Throughput in RTGS grew by 251% over the previous year. Despite a challenging interest rate environment, the Bank's holding in government securities has been substantially protected from market risk as it is held as per specified guidelines of RBI. The portfolio gave a return of 7.64%. The Bank established a Medium Term Note (MTN) Programme for Euro One billion as a part of the funding plan for its overseas operations. During the year, the Bank raised USD 150 million as Upper Tier-II (the first hybrid capital issuance out of India) and USD 46 million as Hybrid Tier-I capital in terms of recent guidelines issued by RBI. The Bank also raised senior debt through the issuance of USD 250 million of three-year floating rate notes (FRN) under the MTN programme. The Asset Magazine published in Hong Kong voted the Bank's Upper Tier-II issue as Best Deal, India. While the Upper Tier-II issue was oversubscribed six times, the Floating Rate Note (FRN) issue was priced at the lowest coupon for Indian bank debt insurance.

31

BUSINESS BANKING
Business Banking has consistently focused on procuring low cost funds by offering a range of current account products and cash management solutions across all business segments covering corporate, institutions, Central and State Government Ministries and Undertakings as well as small business customers. Cross selling of transactional banking products to develop account relationships, aided by product innovation and a customer-centric approach have borne fruit in the form of growing current account deposit balances and increasing realisation of transaction banking fees. Sourcing of current account deposits is a focus area for growth. As of 31 March 2007, current account deposits grew by 41.83% to Rs. 11,304.31 crores from Rs. 7,970.08 crores in the previous

32

year. On a daily average basis, current account deposits grew from a level of Rs. 4,428 crores for the yearend account deposit balances.

CASH MANAGEMENT
Cash Management Services (CMS) initiatives leveraged the Bank's growing branch net work and robust technology to provide a wide range of customised solutions to suit the dynamic requirements of its clients. The Bank offers CMS solutions for collections and payments with an ideal blend of structured MIS and funds movement so that clients are able to enhance their fund management capabilities. Also the Bank's Web CMS initiative allows them to view their daily transactions on a real time basis. The strong correspondent bank alliance with partner banks offers corporate clients a

33

wide geographical coverage. CMS foray is not only emerging as an important source of fee income but is also contributing significantly towards garnering zero cost funds, forging large relationships. The Bank has established a strong presence by offering collecting bank services in the IPO/FPO segment and Dividend/Refund Warrant segments. During the year, the CMS throughput grew by 80% to Rs. 3, 79,067 crores compared to Rs. 2,10,977 crores last year. During the same period, the number of CMS clients has grown to 2,164 clients from 1,432 clients. The Bank has acted as an Agency Bank for transacting Government Business for the last 6 years, offering banking services to various Central Government Ministries and Departments and other State Governments and Union Territories. Currently, the Bank accepts Income Tax and Other Direct Taxes through its 214 Authorized Branches at 137 locations, and Central Excise and Service Taxes through its 56 Authorised Branches at 13 locations. The Bank also handles disbursement of Civil Pension through 218 Authorised Branches and Defence Pension through 151 Authorised Branches. Additionally, the Bank is providing collection and payment services to four Central Government Ministries and Departments and seven State Governments and Union Territories. The Bank has further strengthened its association with the e-Governance initiatives of various State Governments in India aimed at providing better citizen services by setting up integrated citizen facilitation centers. During the year, the Bank associated with the 'Choices' Project of the Government of Chhattisgarh and the 'e-Suvidha' initiative of Government of Uttar Pradesh. During 2006-07, the Bank has also extended the business of Stamp Duty Collection through franking in Rajasthan, in addition to Maharashtra and Gujarat. The Bank also launched an e-Tax Payment Facility for payment of Direct Taxes on behalf of the Central Board of Direct Taxes (CBDT) through the internet for its customers. Additionally, the Bank also launched an e-Payment facility for payment of Commercial Taxes on behalf of the Department of Commercial Taxes, Government of Chhattisgarh. During 2006-07, the total Government business throughput registered a growth of 36% to Rs. 37,932 crores against Rs. 27,888 crores in the previous year. 34

CAPITAL MARKETS
The Bank's Capital Markets business encompasses activities both in the equity capital markets and debt capital markets. The equity capital market activities involve providing advisory services pertaining to raising of equity and quasi-equity funds through various instruments by its corporate clients. The Bank is a SEBI registered Category I Merchant Banker with experience in management of public and rights issues. The Bank provides debt capital market services by acting as Advisors for raising Rupee and foreign currencies term loans, foreign currency convertible bonds and Rupee denominated bonds. The Bank is an active player in the domestic debt market and has syndicated an aggregate amount of Rs. 30,600 crores by way of bonds and debentures, as also term loans during 2006-07. Prime Database has ranked the Bank as the number 2 arranger for private placement of bonds and debentures for financial year 2006-07, Bloomberg has also ranked the Bank number 3 in the India Domestic Bonds League table for the calendar year 2006. The Bank's Capital Markets business also involves providing corporate restructuring advisory services, mergers & acquisitions advisory services, arranging services for acquisition funding, infrastructure and project advisory services (including preparation of business plans), technoeconomic feasibility reports and bid process management. The Bank also provides trusteeship services, acting as both debenture and security trustees, monitoring agency for equity issue proceeds and trustees for securitisation issues. The Bank also conducts a depository participant business. The Bank also maintains an investment and proprietary trading portfolio in corporate bonds and equities. As on 31 March 2007, the Bank's investment in corporate bonds, equities and others was Rs. 9,600.60 crores, as against Rs. 8,901.27 crores in the previous year. Of this, as on

35

31 March 2007, the Bank has made investments of US Dollars 129 million (equivalent to Rs. 561.87 crores) at overseas branches.

INTERNATIONAL BANKING
With increasing integration of the Indian economy globally and consequent two way flows of funds and services, the Bank had identified international banking as a key opportunity to leverage the skills and strengths built in its domestic operations in serving the requirements of its clients in the areas of trade and corporate banking, as also investment banking by establishing presences at strategic international financial hubs in Asia. In this direction, the first overseas branch of the Bank was opened in Singapore in April 2006 and, subsequently, a branch in Hong Kong and a representative office in Shanghai in China commenced operation during the year 2006-07. In addition, the Bank has also set up a branch in the Dubai International Financial Centre, UAE in early April 2007. The Bank's presence at these locations, through which the bulk of the trade in Asia gets routed, would enable the Bank to provide services at every cycle of the trade finance products, besides providing an opportunity to foray in the international investment banking markets.

CREDIT RISK MANAGEMENT

The changing operating environment for banks entails managing complex and variable risks in a disciplined fashion. The key challenges for effective management of variegated risks emanate from creation of skill sets within the Bank with appropriate domain knowledge and developing a functional framework to monitor risks with triggers in cases of breaches in the pre-accepted levels of identified risks. The Bank, since the inception of the Risk Department, has developed in-house skills to manage key areas of risk viz., credit risk, market risk and operational risk. In respect of

36

credit risk, emphasis is currently placed on evaluation and containment of risk at individual exposures for non-schematic loans and analysis of portfolio behaviour in case of schematic loans. There is increasing use of sophisticated modelling techniques to contain credit risk, while in the case of market risk the measurement of market risk on identified portfolios and their effective monitoring is becoming increasing. Quantative in its use of statistical techniques. In the area of operational risk, the Bank has created a framework to monitor resultant risk and to capture loss data. The Bank has also formulated a global risk policy for overseas operations and a country specific risk policy for the Singapore and Hong Kong branches during the year. The policies were drawn based on the risk dimensions of dynamic economies and the Bank's risk appetite. The Bank's risk management processes are guided by well-defined policies appropriate for the various risk categories, independent risk oversight and periodic monitoring through the sub-committees of the Board of Directors. The Board sets the overall risk appetite and philosophy for the Bank. The Committee of Directors, the Risk Management Committee and the Audit Committee of the Board, which are sub-committees of the Board, 27 review various aspects of risk arising from the businesses of the Bank. Various senior management committees operate within the broad policy framework.

] Credit Committees and Investment Committees operate within the delegated power to convey approvals for acquisition of assets and manage such portfolios. The Asset and Liability Management Committee (ALCO) is responsible for reviewing the balance sheet, funding, liquidity, capital adequacy, capital raising, risk limits and interest rate risk in the trading and banking book. In addition, ALCO also monitors and reviews external and economic changes affecting such risks. The Operational Risk Management Committee assesses operational risk in various activities undertaken

37

by the Bank, suggests suitable mitigants in case of identification of a gap in the process flow, and reviews product approvals.

CORPORATE SOCIAL RESPONSIBILITY

Being an integral part of society, the Bank is aware of its corporate social responsibilities and has engaged in community and social investments. During the year, the Bank has set up a Trust - the UTI Bank Foundation - with the objective of providing philanthropic assistance for public health and medical relief, education and alleviation of property. During the year, the Trust focused on primary education for the 33sess

CHAPTER-3 INDUSTRY ANALYSIS

The banking industry has come under increasing pessimism of late because of rising short and longterm interest rates. The banking industry's market capitalization made a substantial decline. Most 38

investors are concerned with whether the industry can sustain continued profitability as a result of these factors. Banks have responded in recent years to these problems by diversifying away from interest sensitive products and services. But interest rates are the fundamental aspect of any financial services. Therefore, I believe the financial services industry will be deeply affected by rising interest rates. Banks have experienced good business factors over the past two years. Interest rates were low, credit quality was good, and inflation was low. These factors are usually predictive of the types of earnings banks should report. But good times can't continue because interest rate hikes because reduced lending activity, damaged credit quality, and reduced values of bond portfolios. Porter's Five Forces Analysis: 1. Rivalry among competing sellers: The banking industry is continuing to restructure and position itself for our changing economy as a result, many megamergers have occurred in recent years. Citicorp and Travelers Insurance agreed to merge in April 1998 at a value of $70 billion. Bank of America and Nation's Bank also agreed to merge shortly afterwards which became the largest bank in the United States. Bank mergers are usually consummated as a cost-cutting measure but also to compete with non-bank providers of financial services. Bank rivalries are very strong, and as we've seen many of the largest banks are merging to increase their power. In fact, Charlotte, NC is practically owned by Bank of America and First Union. 2. Potential entry of new competitors: There is virtually no chance of a new entrant significantly affecting the major banks' market share. The only place that new entrants may have a chance in the industry is through Internet banking, because of its low cost. 3. Firms offering substitute products: This is not really an issue within the banking industry, because there aren't really any legal alternatives, except buying a safe and borrowing from a loan shark 4. Competitive pressures stemming from supplier and buyer bargaining power: I grouped these two categories together because in the banking industry the buyers are the suppliers and vice versa, so I might as well just discuss the situation as a whole. Interest rates are the single most important aspect of bank profitability they are the bargaining power. Most bank profits are derived from net interest income. This is interest income received on

loans minus interest expense for borrowed funds. Interest rates determine the amount of money a bank can earn. Another measure is a banks' net interest margin which is a bank's net interest income divided by its average earning assets. This is a common measure of a bank's ability to squeeze profits from its loans. When interest rates fall, they have a positive effect on a bank. First, net

39

interest margin can expand. Second, the value of a bank's fixed rate of investment portfolio is enhanced by declining rates, since a bond with a higher stated interest rate becomes more valuable as prevailing rates drop. Third, falling rates lower the cost of credit, which stimulates loan demand and reduces delinquency rates. Opportunities: 1. Because of the increasing amount of technology Internet banking will begin to replace traditional banking, thus cutting personnel costs. 2. Incorporating investment banking into the banking industry, as some major companies are doing, lets the bank increase profits and promote economic growth while improving company image. Threats: 1. An increase in interest rates causing a decline in bank activity. 2. A collapse of the Fed leading to bank failures, a repeat of the crash of 1929. 3. A decline in the US economy leading to a fall in the value of the dollar, thus causing an instable economy. From there the US banking system would be less secure in terms of dollar values that many people would move their money overseas into a more stable economic situation. Similar to the situation in many South American countries. (a little far-fetched, but possible) Key Success Factors: Capability to use the internet for banking, investing, and general e-commerce Size of company, name recognition, innovative local marketing Best rates (loans, checking, savings, etc.) The capability to have the fastest and simplest banking through design, innovation, and location

CHAPTER-4 PERFORMANCE SUMMARY

40

Interest income grows by 55% YoY on the back of 50% YoY growth in advances. Net interest margin improves to 3.3% due to lower cost of funds and higher proportion of CASA. Cost to income ratio remains stable at 50%.Bottom line grows by 66% YoY aided by strong traction in fee income, despite higher provisioning. Capital adequacy ratio (CAR) comfortable at 16.9%. Rs (m) Interest income Interest expense Net Interest Income Net interest margin (%) Other Income Other Expense Provisions contingencies Profit before tax Tax Profit after tax/ (loss) Net profit margin (%) No. of shares (m) Book value per share (Rs) P/BV (x)* and 2,797 3,369 515 3,339 977 1,847 15.9% 4,879 5,629 2,001 6,723 1,654 3,068 17.0% 74.4% 67.1% 3QFY07 3QFY08 Change 9mFY07 9mFY08 Change 11,648 18,023 54.7% 7,737 3,911 10,550 36.4% 7,473 91.1% 31,201 20,908 10,293 2.9% 7,090 8,715 49,898 32,329 17,569 3.3% 12,390 14,928 4,154 15,031 3,780 7,097 14.2% 357.4 234.3 4.7 74.8% 71.3% 122.9% 73.4% 62.0% 58.7% 59.9% 54.6% 70.7%

288.5% 1,864 101.3% 8,668 69.3% 66.1% 2,333 4,471 14.3% 281.2

Axis Bank touched the 50% mark in its advance growth for the tenth consecutive quarter in 3QFY08. What makes the growth more sustainable is that the bank has not concentrated its exposure to any single segment but has been altering its asset mix depending upon the industry scenario and its risk appetite. Also, a rise in the proportion of CASA (current and savings accounts) suggests a cost conscious strategy with respect to deposit accretion.

41

42

EXPECT
At the current price of Rs 1,094, the stock is fairly valued at 3.3 times our estimated FY10 adjusted book value. While Axis Bank continues to outperform our expectations in terms of asset growth and fees, we also derive comfort from its cost-centric approach. Although the fact that the bank has chosen to guard its asset quality rather than chase high yielding assets is encouraging, this may put its net interest margins at risk. Nevertheless, the bank's consistency in fee income growth makes it a safe play in the rising interest rate scenario. Our outlook on the bank continues to remain positive from a long-term perspective, however, the current valuations warrant a cautious approach.

43

CHAPTER-5 SWOT ANALYSIS

STRENGTHS: High quality service provide Strong and well management. Second largest private bank all over India AXIS Bank has been to able maintain the quality of its loan portfolio

WEAKNESSES: Strengthening of rupee hitting profits Ability to pass through price increases in various markets due to Intense competition. Manpower problem is big problem

OPPORTUNITY Development of modern banking. Potential for growth through increased penetration. Opportunity to no:1 bank all over India.

44

 Increasing popularity in overseas markets

THREATS/CHALLENGES:

Environment with diverse players Rising competitors for private banking Change in fiscal benefits/laws People attraction & retention Management of country risk.

45

CHAPTER-6 RATIO ANALYSIS

Mar ' 08 Mar ' 07 Capital Adequacy Ratio EARNINGS RATIOS Income from 0.00 49.48 0.00 11.57

Mar ' 06 11.08s

Mar ' 05 12.66

Mar ' 04 11.21

Fund Advances as a % of Op Income Operating Income as a % of Funds Fund Working based

42.51

42.56

36.28

14.81

16.10

14.73

22.59

income as a % 100.00 85.58 of Op Income Fee based income as a % 0.00 of Op Income PROFITABLITY RATIOS Yield on Fund Advances Break-Even 14.41

86.07

85.28

91.28

13.92

14.71

8.71

7.32 8.11

6.84 8.11

6.27 7.64

8.19 10.90

46

Yield Ratio Cost of Funds Ratio Net Profit

4.73 12.17 12.21

4.67 12.01 19.50

4.23 13.47 16.94

3.56 14.33 13.54

4.75 13.14 24.01

Margin Adjusted Return On Net Worth Reported Worth BORROWING RATIOS Borrowings from RBI as % to Total Borrowings Borrowings from Total Borrowings Borrowings from others as a % to Total Borrowings Borrowings within India as a % to Total Borrowings Borrowings from Total Borrowings DEPOSIT RATIOS Demand outside other

Return On Net 12.21

19.42

16.88

13.89

24.49

0.00

0.00

0.00

0.00

0.00

banks as a % to 0.00

11.54

32.37

9.55

18.61

100.00 23.17

45.64

63.42

57.36

100.00 34.71

78.02

72.98

75.97

India as a % to 0.00

65.28

21.97

27.01

24.02

100.00 19.22

19.86

22.56

25.74 47

Deposit of Total Deposits Saving Deposit of Total 0.00 20.62 20.10 15.42 12.33 Deposits Time Deposit of Total Deposits Deposits within India as % to Total Deposits Deposits Outside India as % to Total Deposits PER BRANCH RATIOS Operating Income Per 9.74 7.99 6.78 8.39 Branch Operating Profit Per Branch Net Profit Per Branch Personnel Expenses Per Branch Administrative Expenses Branch Financial Expenses Per 5.34 4.02 3.52 4.05 Branch Borrowings Per Branch Deposits Branch PER Per Per 1.54 1.28 0.89 1.86 0.36 0.00 0.00 0.00

0.00

60.14

60.02

62.01

61.92

99.63

100.00

100.00

100.00

2.13 1.18

2.11 1.08

1.82 0.96

1.96 1.08

0.68

0.53

0.52

0.48

9.26 104.79

5.96 89.14

5.25 93.55

2.09 83.15

48

EMPLOYEE RATIOS (Rs. in Units) Operating Income Per 5,472,542.38 5,485,206.78 4,829,294.06 6,137,279.66 Employee Operating Profit Per Employee Net Profit Per Employee Personnel Expenses Employee Deposits Per Per

1,195,476.65 1,451,095.07 1,293,245.96 1,430,794.89 663,264.93 742,839.77 685,089.48 791,634.17

382,110.32

366,552.42

371,465.66

351,755.15

Employee Fund Advances Per Employee

58,903,407.92 61,213,995.57 66,607,855.70 60,788,809.11 36,950,383.97 34,051,931.02 32,772,362.74 27,162,590.66

CASH FLOW STATEMENT (FOR THE YEAR ENDED 31 MARCH 2007)

Year ended 31-03-2007 (Rs. in 000) Cash flow from operating activities Net profit before taxes Adjustments for: Depreciation on fixed assets 1,118,640 921,933 9,962,386 7,313,011 Year ended 31-03-2006 (Rs. in 000)

49

Depreciation on investments Amortisation of premium on Held to Maturity investments Provision for Non Performing Advances/Investments (net off bad debts) General provision on Securitised assets Provision on standard assets General provision for retail assets Provision for wealth tax Loss on sale of fixed assets Amortisation of deferred employee compensation TOATAL Adjustments for: (Increase)/Decrease in investments (Increase)/Decrease in advances Increase/ (Decrease) In borrowings Increase/ (Decrease) In deposits (Increase)/Decrease In other assets Increase/(Decrease) in Other liabilities & provisions Direct taxes paid Net cash flow from Operating activities

669,666 987486

34,158 875457

737,370 25,400 1,223,500 17,700 2,487 29,101 27,067 14,800,803

1,270,497 (4,000) 446,800 800 1,457 16,992 63,235 10,940,340

(21,042,997) (146,307,497)

(46,298,353) (68,244,549)

25,146,713 186,720,698 (1,318,740) (914,451) (4,129,261) 52,955,268

8,995,203 84,015,312 4,598,124 11,543,386 (3,147,781) 2,401,682

50

Cash flow from investing activities Purchase of fixed assets (Increase)/Decrease in Held to Maturity Investments Proceeds from sale of fixed assets Net cash used in Investing activities Cash flow from financing activities Proceeds from issue of Subordinated debt (net of repayment) Proceeds from issue of Perpetual Debt and Upper Tier II instruments Proceeds from issue of Share Capital Proceeds from Share Premium (Net of share issue expenses) Payment of Dividend Net cash generated from Financing activities 3 16,370,130 9,962,057 330,025 (1,117,416) 800,524 (887,410) 13,735,120 29,401 48,943 3,393,000 10,000,000 (36,555,754) (20,974,681) 34,855 42,235 (34,364,646) (19,542,984) (2,225,963) (1,473,932)

CASH FLOW STATEMENT (FOR THE YEAR ENDED 31 MARCH 2007)

Year ended 31-03-2007 (Rs. in 000) Effect of exchange fluctuation Translation reserve Net increase in cash and
51

Year ended 31-03-2006 (Rs. in 000) -

(5,015)

cash equivalents Cash and cash equivalents as at 1 April 2006 Cash and cash equivalents As at 31 March 2007

32,764,629 36,418,422 69,183,051

(8,610,942) 45,029,364 36,418,422

PROFIT AND LOSS ACCOUNT

Schedule No. I INCOME Interest earned Other income 13 14

(Rs. in Thousands) 45,603,943 10,099,065

52

TOTAL II EXPENDITURE Interest expended Operating expenses Provisions and contingencies TOTAL III CONSOLIDATED NET PROFIT ATTRIBUTABLE TO GROUP Balance in Profit & Loss account brought forward from previous year Utilization for Employee Benefits Provision under Accounting Standard (AS)-15 (Revised) 17 (4.10) IV AMOUNT AVAILABLE FOR APPROPRIATION V APPROPRIATIONS: Transfer to Statutory Reserve Transfer to Capital Reserve Proposed Dividend (includes tax on dividend) Balance in Profit & Loss account carried forward TOTAL 15 16 17(5.1.1)

55,703,008

29,931,767 12,193,592 7,035,173 49,160,532

6,542,476

7,310,390 (318,028)

13,534,838

1,647,571 156,415 1,487,919 10,242,933 13,534,838

53

VI EARNINGS PER EQUITY SHARE (Face value Rs. 10/- per share) (Rupees) Basic Diluted Significant Accounting Policies and Notes to Accounts

17 (5.1.4)

23.33 22.63 17

Schedules referred to above form an integral part of the Consolidated Profit and Loss Account As per our report of even date For UTI BANK LTD. For S. R. BATLIBOI & Co. Chartered Accountants P. J. Nayak Chairman & Managing Director

BALANCESHEET AS ON 31ST MARCH 2007

CAPITAL AND LIABILITIES

schedule no:

as on 31-3-07 (Rs in,000)

54

Capital Reserves & Surplus Employees' Stock Options Outstanding (Net) Deposits Borrowings Other liabilities and provisions TOTAL

1 2 17(4.15) 3 4 5

2,816,308 31,068,175 89,783 51,956,030 58,779,259 732,559,782

587,850,227

ASSETS Cash and Balances with Reserve Bank of India Balances with banks and money at call and short notice Investments 7 8 22,572,748 268,871,605 6 46,610,303

55

Advances Fixed Assets Other Assets TOTAL Contingent liabilities Bills for collection Significant Accounting Policies And Notes to Accounts

9 10 11

368, 764,60 6,778,359 18,962,161 732,559,782

12

1,841,653,501 62,746,332

17

Schedules referred to above form an integral part of the Consolidated Balance SheetAs per our report of even date For UTI BANK LTD.

RATE OF DIVEDEND DECLAIRED BY AXIS BANK

YEAR 1999-2000 2000-01 2001-02 2002-03 2003-04

DIVEDEND 12% 15% 20% 22% 25%

56

2004-05 2005-06 2006-07 2007-08

28% 35% 45% 60%

RISING PROFITABILITY OF AXIS BANK

RETURN ON ASSET OF AXIS BANK

57

58

CHAPTER-7 FINDINGS
Here lot of things I find to make this project report.

Firstly know to how they manage there banking system.

Secondly known there operation system.

Thirdly known there controlling risk management.

Fourthly I know it that how to manage there financial system.

How to operate their share holder.

Know how to control competitors.

Growth banking industry.

Growth of axis bank.

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CHAPTER-8 BIBLIOGRAPHY
Web sites.
www.axisbank.com www.ragadirect.com www.altavista.com www.answers.com www.slideshare.com www.managementparadise.com

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