Axis Bank Limited, the fourth-largest private bank in India in terms of market capitalization, informed the exchanges that the deal to acquire Citibank India’s consumer business and NBFC (non-banking financial company) business of Citicorp is expected to be completed by March 1st, 2023.
As per the deal, the customers, employees, and assets of Citibank will be transferred to the private bank, for a consideration of Rs 12,325 crore. Further, a transition period of 18 months shall be given to the customers of Citibank to migrate to Axis bank, post the completion of the deal.
The shares of the Axis bank were trading marginally higher at Rs 852 levels. In the past month, the stock has declined by approximately 3 percent. However, on a yearly basis, the stock has gained 15 percent.
On a consolidated basis, their Net Interest Income (Interest earned-Interest expended) stood at Rs 11,748.59 Crores which was an increase of 33 percent Year on Year from Rs 8858.02 Crore. Their net profit in the period zoomed by 56 percent to Rs 6209.37 Crore up from Rs 3973.07 Crore in the same period a year earlier.
The Bank’s total advances grew by 15% year-on-year and stood at Rs 7.62 lakh crore. Retail loans grew by 17% since last year and accounted for 56% of the bank’s net advances.
Further, the asset quality for the lender improved as the gross non-performing asset ratio fell by 12 basis points sequentially to 2.38%. The net NPA ratio, too, improved to 0.47% from 0.51% as on Sept. 30.
Brokerage firm Morgan Stanley has given an ‘overweight’ rating to Axis Bank for a target of Rs 1,200 per share which represents an upside of 41% from the current levels.
The brokerage said that management expects likely completion of the Citi acquisition by March 1 this year. It is positive on a structural turnaround of the franchise and expects a return on equities (RoEs) to be more than 16 percent by FY24/FY25. The valuation is expected at 1.5x and the FY24 book appears attractive the brokerage highlights.
Written by Anoushka Roy
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