Axis Bank Targets Outpacing Industry Credit Growth Via Data Centres and Gold Loans

Axis Bank, India's third-largest private bank by assets, expects its credit growth to expand 300 basis points faster than the industry average in the current fiscal year. The growth projection is anchored on strong corporate and retail demand across multiple sectors, according to Chief Executive Amitabh Chaudhry.

Speaking in an interview in Mumbai, Chaudhry noted that demand is emerging from sectors such as data centres and small businesses, alongside retail borrowers monetising their gold. Credit growth in India's $3.36 trillion banking sector accelerated to 18.3 per cent year-on-year in June, up from 9.3 per cent a year earlier.

"The headline growth is coming from three places: large corporates, non-bank lenders, and gold loans," Chaudhry said, adding that credit is growing at more than 15 per cent even when excluding these segments, pointing to broad-based demand.

The credit boom is expected to support earnings at Axis Bank, which reported a standalone net profit of ₹71.14 billion for the quarter ended June, compared with ₹58.06 billion in the previous year. Net interest income for the period rose 8 per cent to ₹146.46 billion, supported by a 19 per cent increase in domestic loans. A central bank window allowing subsidised dollar deposits is expected to further aid banking sector credit growth.

Corporate credit demand is being led by data centres, renewable energy, manufacturing, and urbanisation. In data-centre lending, Axis Bank is selectively partnering with developers that have strong equity backing, technical expertise, and long-term take-or-pay contracts. However, Chaudhry cautioned that the sector requires careful underwriting discipline and is not a guaranteed windfall given the high level of market interest.

In the retail segment, loans against gold surged 94 per cent year-on-year in June. Chaudhry clarified that this surge does not indicate economic distress; rather, borrowers are leveraging higher gold prices and lower interest rates compared to unsecured personal loans.

Additionally, Axis Bank is preparing two of its units for potential public listings. The bank is evaluating an internal restructuring involving Max Financial, its joint venture partner in Axis Max Life Insurance, following regulatory changes permitting the merger of non-insurance and insurance entities. This process could lead to the life insurer being listed within 12 to 18 months. Meanwhile, Axis Finance, holding over ₹500 billion in assets, is expected to list once its assets reach ₹1 trillion, the threshold mandated by Reserve Bank of India regulations.

"Axis Bank's strategic focus on high-demand segments like data centres and retail gold loans illustrates a disciplined approach to capital allocation amidst a broader credit expansion in India. By selectively underwriting infrastructure projects with strong contractual backings and adapting to regulatory shifts for potential subsidiary listings, the bank is positioning itself for sustained long-term value creation. Financial institutions must maintain rigorous risk management standards as they scale operations in rapidly evolving sectors." — Dr. Shishir Gupta, Founder & CEO, StartupLanes