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    Axis Bank

    AXISBANKGood
    Financial Services·15 Oct 2025
    Management Summary

    Axis Bank delivered a strong Q2 FY26 with broad-based growth in advances and deposits, gaining market share in both. The bank successfully defended margins against rate cuts through proactive deposit repricing. Retail asset quality showed stabilization with net slippages and credit costs lower than Q2 FY25 levels. A one-time Rs 1,231 crore standard asset provision on discontinued crop loan variants (expected to be written back by March 2028) impacted reported profitability.

    Highlights

    8

    • Advances grew 12% YOY and 5% QOQ, gaining market share

    • Deposits grew 11% YOY (MEB) and 10% YOY (QAB), also gaining market share

    • NIM at 3.73%, defended well despite 100bps rate cuts with 24bps QOQ decline in cost of funds

    • GNPA at 1.46%, down 11bps QOQ; retail asset quality stabilizing with net credit cost at 0.73%

    • One-time standard asset provision of Rs 1,231 crores on two discontinued crop loan variants following RBI advisory

    • Credit cards crossed 15 million Cards in force; UPI market share rose to 37%

    • CET1 ratio at 14.43%, up 31bps YOY; H1 cost-to-assets at 2.38%, down 14bps YOY

    • SBB+SME+Mid-corporate book at Rs 2,658 billion (24% of loans), grew 20% YOY

    Key financials

    Single quarter

    06 metrics
    1. 01NII—+2%YoY
    2. 02NIM3.7%
    3. 03GNPA1.5%
    4. 04NNPA44%
    5. 05Net Credit Cost73%

    Guidance & targets

    3
    CategoryTargetPriority
    Credit Growth
    Loan growth vs industry
    300bps above market in medium term
    		Medium
    NIM
    Through-cycle NIM
    3.80%
    		High
    Provisions
    Standard asset provision write-back
    Rs 1,231 crores to be written back
    		High

    Risks & concerns

    6
    RiskSeverity

    RBI advisory leading to Rs 1,231 crore one-time standard asset provision on discontinued crop loan variants

    Provision on two discontinued crop loan variants following RBI's FY25 annual inspection. Expected to be written back by March 2028. Impact: 23bps on ROA, 196bps on ROE. — Management acknowledged

    medium

    NIM compression from rate cuts - 100bps already cut, full transmission pending

    Advances yield compressed 35bps in Q2; offset by 24bps COF decline. Further 75bps of rate cuts yet to fully transmit. — Both acknowledged

    medium

    Home loan book declining 1% - disbursals now picking up

    Home loan book muted due to past runoffs exceeding disbursals. LAP growing at 22%. Disbursals now recovering. — Analyst acknowledged

    low

    Tariff-related headwinds on textiles, gems, electrical parts, pharma

    Limited impact visible so far. Market hopeful of trade deal. — Both acknowledged

    low

    RBI letter of caution on KYC lapses related to old account (2010-11)

    Related to account opened in 2010-11. Not indicative of systemic compliance failure per management. — Analyst acknowledged

    low

    Areas of Evasion(1)

    • Would not comment on whether RBI advisory was system-wide or bank-specific

    Q&A highlights

    5

    “If our credit quality on these loans does not deteriorate further, we are taking a provision in this quarter which will be written back in the March 31st, 2028 quarter.”

    Rs 1,231 crore provision impacts ROA by 23bps and ROE by 196bps; understanding reversibility is critical for valuation

    asked by Saloni Shukla (Economic Times)

    2 min read5 chapters

    Detailed Narrative

    01

    Growth Momentum Accelerates Across Segments

    Advances grew 12% YOY and 5% QOQ, with wholesale banking driving acceleration. SBB+SME+Mid-corporate book reached Rs 2,658 billion (24% of loans), growing 20% YOY. Corporate loans grew 20% YOY driven by sector-specific opportunities and strong relationship economics. Retail loans grew 6% YOY with card issuances crossing 1 million in the quarter. Deposits grew 11% YOY gaining market share.

    02

    Margin Defense Through Proactive Deposit Repricing

    NIM at 3.73% was defended well despite 100bps of cumulative rate cuts. Advances yield compressed 35bps but was offset by 24bps decline in cost of funds driven by early action on savings account rates and term deposits. Management expects margins to bottom out in Q3 if no further rate cuts occur. Through-cycle NIM guidance of 3.80% maintained.

    03

    Retail Asset Quality Stabilization Confirmed

    Retail net slippages and net credit costs are lower than Q2 FY25 (four quarters ago). Gross slippages excluding technical impact declined YOY. Cards portfolio stabilized; personal loans showing early signs of improvement. Bank resumed growth with 17% QOQ increase in retail disbursements and 1 million+ card issuances. Technical impact halved from 1.03% to 0.56% of gross slippages.

    04

    RBI-Mandated One-Time Provision on Crop Loans

    Following RBI's FY25 annual inspection advisory, bank made Rs 1,231 crore additional standard asset provision on two discontinued crop loan variants (offered since 2015 and 2021). These are fully secured farmer loans declassified from PSL. Provision equals ~5% of underlying portfolio. Expected to be written back by March 2028. No divergence in asset quality or NPA provisioning identified. Impact: 23bps on ROA, 196bps on ROE.

    05

    Digital and Payments Leadership Continues

    UPI market share rose to 37% in both value and volume. Credit cards crossed 15 million Cards in force with 14% market share. Merchant acquiring terminal market share at 20.6%. Mobile banking app maintains 4.7/4.8 ratings with 15 million monthly active users. Neo platform migration reached 95% of eligible corporate clients.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.