Axis Bank likely to limit retail expansion plan

MUMBAI (Makemystocks): Axis Bank (BOM 532215) will likely to limit its retail advance expansion plan due to various reasons such as sluggish housing loan demand, recent foray into auto loan business and a cautious stance on personal loan.

The bank has set a target to increase its share of retail loans to 25% of total advances in next two years from 20% now. "To achieve the target, the growth rate of 26% (in retail advances) needs to be improved substantially," Deputy Managing Director S.K. Chakrabarti told TickerNews Service in an exclusive interview.

"We have not gone into that trajectory so far because of cautiousness in terms of personal loans and in housing there is slight lack of buyer interest in bigger centers as property prices are very much in the upswing." India's third largest private lender closed the first quarter of this financial with retail advances of Rs 210.73 billion, up 26% from a year ago.

"That is why, while 26-27% growth is assured, but to make our retail asset portfolio 25% of total advances, there may be a delay," he said. Housing loan forms 67% of the bank's retail advances while share of personal loan and credit card business is over 20% of the retail loan book. Auto finance accounts for near 13% of the bank's retail asset portfolio.

"In auto loans, we started getting into it only a couple of years back and we are only in the new four-wheeler (loan segment). Being a new player our dealer relationship is still to be built up in a big way. We are now taking every effort to ensure it grows up but that build up takes time."

He, however, expects growth in retail advances may gather pace in the second half of 2010-11 (Apr-Mar) with the beginning of festive season. "Hopefully, situation will improve in next couple of months and there will be a perk up in demand. If market improves, if we get good proposals our aim to increase share of retail loans may even happen in next two years," he said.

Axis Bank shares ended today at Rs 1,363.10 on Bombay Stock Exchange, up 0.30% from previous close.