Axis Bank: Axis Bank turns to unsecured lending as growth picks up
Head of personal loans Sumit Bali said the proportion of unsecured loans will rise to 22% -24% in the near future, with the bank focusing more on credit cards, personal loans and small loans. companies.
“The impact of Covid has now abated and the appetite for risk is returning. We plan to gradually increase our exposure to low-term unsecured loans,” Bali said.
Retail loans at ₹ 3.5 lakh crore make up 56% of the bank’s net advances, 80% of which were guaranteed at the end of September 2021. Bali said that ratio would decline as the bank seeks to improve its profitability.
Secured loans are led by home loans, auto loans, and small business secured loans and loans against property (LAP). Bali said the bank’s risk management and underwriting capabilities are now proven, allowing it to enter riskier lending segments.
Unsecured loans usually come with higher margins. Personal loans, for example, have margins 7 to 8 percentage points higher than the 1 to 1.25% margin on home loans, while for unsecured small business loans it could be 9 higher. at 10 percentage points, Bali said.
Home loans represent 37% of the bank’s personal loans, followed by rural, auto, personal and LAP loans.
Axis also offers an installment business loan of less than 10 lakh to the self-employed. Bali said it expects demand for loans from this segment as economic activity picks up. “The pandemic has changed the mindset of customers when it comes to spending. While some segments like travel or restaurants have been affected, we are seeing positive indicators in terms of retail spending aided by the model of hybrid work. ”
Axis held an 8.5% share of credit card spending, dominated by retail at the end of September. He is banking on partnerships with Flipkart to increase emissions and expenses.
The bank is also in the race to buy out Citibank’s retail franchise in India, which was blocked in April. “It is common knowledge that we are one of the bidders. It’s a mix of retail assets, liabilities and wealth management which are good segments that we are interested in,” Bali said.