Axis Bank — Q3 FY26 earnings call

Call held 26 Jan 2026

Management summary

Axis Bank delivered strong Q3 FY26 results with robust growth in deposits (15% YoY) and advances (14% YoY), leading to a 28% QoQ increase in PAT to Rs. 6,490 crores. Operating performance remained steady with core operating revenue and profit up 7% YoY, and cost to assets improving by 15 bps YoY. However, NIM saw a 9 bps QoQ decline to 3.64%, and CASA ratio decreased. The bank remains well-capitalized and continues its focus on digital initiatives and strategic growth areas.

Highlights

  • Deposits growth momentum continued with month-end balances growing 5% QoQ and 15% YoY, and quarterly average balances growing 5% QoQ and 12% YoY.

  • Total advances grew 4% QoQ and 14% YoY, with Small business, SME and mid-corporate together growing at 5% QoQ and 22% YoY.

  • Core operating revenue was up 7% YoY and the core operating profit was up 7% YoY.

  • PAT was up 28% QoQ to Rs. 6,490 crores.

  • The Bank remains well capitalized with a CET 1 ratio of 14.50% and consolidated ROA improved 27 bps QoQ to 1.57%.

Concerns

  • NIM for Q3FY26 was 3.64%, down 9 bps QoQ.

  • QAB CASA declined 65 bps QoQ and 116 bps YoY to 37%.

  • NNPA increased 7 bps YoY to 0.42%, despite declining 2 bps QoQ.

  • Net slippages (adjusted for recoveries from written off pool) were Rs. 2,335 crores.

Key financials

  1. Deposits Growth (Month-end) — +15%YoY
  2. Deposits Growth (Quarterly Average) — +12%YoY
  3. CASA Growth — +14%YoY
  4. Total Advances Growth — +14%YoY
  5. Core Operating Revenue Growth — +7%YoY
  6. Core Operating Profit Growth — +7%YoY
  7. PAT ₹6,490 Cr +3%YoY
  8. NII ₹14,287 Cr +5%YoY
  9. NIM 3.6% -0.09%QoQ
  10. Fee Income ₹6,100 Cr +12%YoY
  11. Operating Expenses ₹9,637 Cr +7%YoY
  12. Cost to Assets 2.3% -0.15%YoY
  13. Net Credit Cost 0.76% -0.04%YoY
  14. Net Credit Cost (excl. technical impact) 0.63% -0.17%YoY
  15. GNPA 1.4% -0.06%QoQ
  16. NNPA 0.42% +0.07%YoY
  17. PCR 70%
  18. Consolidated ROA 1.6% +0.27%QoQ
  19. Consolidated ROE 14.2% +2.6%QoQ
  20. CET 1 Ratio 14.5%
  21. QAB CASA 37% -1.2%YoY
  22. Gross Slippages ₹6,007 Cr
  23. Net Slippages ₹3,135 Cr -11%YoY
  24. Recoveries from Written-off Accounts ₹799 Cr +25%QoQ

What they filed

Q1 FY27: revenue up 9.9%, net profit up 22.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue31,601 32,162 32,452 32,348 32,310 +2%33,709 +5%34,171 +5%35,542 +10%
Net profit7,436 6,779 7,509 6,279 5,567 −25%7,060 +4%7,642 +2%7,670 +22%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Small Business, SME & Mid-Corporate Advances
    22% Growth5% Growth24% Share of Total Bank Loans
  • Retail & CBG Advances
    68% Share of Total Advances (Dec-25)
  • Retail Disbursements
    20% Growth12% Growth
  • Domestic Subsidiaries (9M FY26)
    ₹1,490 Cr Net Profit52% Return on Investment
  • Axis Finance
    22% Overall Assets Under Finance Growth56% Retail + MSME Share of Total Book₹571 Cr 9M FY26 PAT0.36% Net NPA
  • Axis AMC
    11% Overall Quarterly Average AUM Growth₹3.61L Cr Overall Quarterly Average AUM₹454 Cr 9M FY26 PAT
  • Axis Securities
    ₹270 Cr 9M FY26 PAT
  • Axis Capital
    ₹178 Cr 9M FY26 PAT

Capital allocation

high confidence
  • Liquidity Liquidity disclosed The Bank's CET-1 ratio stands at 14.50%. It has provisions aggregating to Rs. 6,243 crores, which have not been reckoned in the capital computation, translating to a capital cushion of ~43 bps. Management reiterated that they do not need equity capital for growth or protection, but may opportunistically evaluate issuing Tier-2 and AT-1 instruments as AT1 is currently due in September 2026. The impact of new LCR guidelines effective April 1st is expected to be broadly neutral.
    Banks CET-1 including 9MFY26 profit stands at 14.50%, we have net accreted 7 bps of capital in the quarter. The Bank has provisions aggregating to Rs. 6,243 crs which have not been reckoned in the capital computation and translate to a capital cushion of ~43 bps over and above the reported capital adequacy ratio. The Bank assesses its capital position on two pillars i.e. growth and protection. We reiterate that we do not need equity capital for either pillar. We may opportunistically evaluate issuing Tier-2 and AT-1 instruments since our AT1 is currently due in September 2026 based on market conditions. (Puneet Sharma, page 6) So, on LCR question, if you recall from 1st April, there are three things which are changing... our current estimate is that this is what our composition of deposits is. We are broadly neutral in terms of these pluses and minuses effective 1st of April. (Neeraj Gambhir, page 14)

Guidance & targets

Profitability

  • NIM Profitability · Through cycle · High confidence 3.80%
    3.8%, we remain confident of, it is rate cycle agnostic, which is why we say it's a through cycle NIM guidance. We are not walking away from that even today, despite the 125 basis points rate cut that we've seen. We remain confident that we will get to the 3.8% over the duration of our book.

    — Puneet Sharma

  • Cost to Assets Profitability · Medium-term · High confidence Improve (decline)
    So the cost-to-asset ratio will continue to head in the direction based on how the operating jaw continues to remain positive.

    — Subrat Mohanty

  • NII Optimization Profitability · FY26 · High confidence Optimized
    Our comment for FY'26 was driven by the fact that we make these decisions on a plan cycle basis.

    — Puneet Sharma

Volume

  • Deposit Growth Volume · Medium to long term · High confidence Faster than industry
    We continue to demonstrate and remain focused on growing faster than the industry in medium to long term.

    — Amitabh Chaudhry

  • Optimal Loan Book Balance (Retail, Wholesale, SME) Volume · Current plan horizon · Medium confidence 58-60% Retail, 23-25% Wholesale, balance SME
    We think an optimal book balance in the current plan horizon would be 58 to 60 retail, 23 to 25 wholesale and the balance being SME.

    — Puneet Sharma

  • Asset Book Growth (vs industry) Volume · Through cycles · High confidence 300 bps better than industry
    we have said that we will grow our asset book through cycles at about 300 basis points better than the industry.

    — Munish Sharda

Liquidity

  • LCR Impact from New Guidelines Liquidity · Effective April 1st · High confidence Broadly neutral
    our current estimate is that this is what our composition of deposits is. We are broadly neutral in terms of these pluses and minuses effective 1st of April.

    — Neeraj Gambhir

What to watch in Q4 FY26

NIM Trajectory for FY27

Next quarter (after plan cycle decision)
Current NII optimization strategy for FY26
Target New NII optimization plan for FY27

Why it matters

NII optimization is a key driver of profitability, and the FY27 plan will indicate future margin strategy.

Our comment for FY'26 was driven by the fact that we make these decisions on a plan cycle basis. So we are due for our plan cycle for FY'27. Once we've made the decision, we'd be happy to communicate.

Risks & concerns

  • Sustained Divergence of Credit and Deposit Growth

    high

    Credit growth cannot get ahead of deposit growth on a sustained basis; if deposit growth remains anemic, credit growth will come down. Convergence is expected in 15-18 months.

    Management acknowledged

  • Evolving Geo-political Environment and Macro Factors

    medium

    The bank remains vigilant to the evolving geo-political environment and its potential implications for the operating landscape.

    Management acknowledged

  • Competitive Environment for Deposits

    medium

    The re-pricing benefit on deposits may not fully materialize if the rate environment remains competitive through Q4 FY26.

    Management acknowledged

Q&A highlights

7 direct
NIM Guidance (3.8%) and Loan Mix Impact Direct
3.8%, we remain confident of, it is rate cycle agnostic, which is why we say it's a through cycle NIM guidance. We are not walking away from that even today, despite the 125 basis points rate cut that we've seen. We remain confident that we will get to the 3.8% over the duration of our book.

Analyst questioned the confidence in 3.8% NIM guidance given corporate loan growth and potential mix effects, and management reiterated strong conviction.

Asked by Chintan from Autonomous

Deposit Growth Momentum and Convergence with Credit Growth Direct
credit growth cannot get ahead of deposit growth on a sustained basis... I'm hoping that in the next 15 months to 18 months, the deposit growth will stabilize at similar levels as credit growth because there is no option.

Addresses a critical concern about the sustainability of credit growth without commensurate deposit growth, providing a timeline for convergence.

Asked by Chintan from Autonomous

LCR Movement and Sustainability Direct
On LCR, we have been broadly in 115% to 120% range for the last several quarters. We continue to operate in that range... So not too much to be read into that at this point in time.

Clarifies that LCR remains stable within the bank's target range despite quarterly variability, addressing analyst's concern about a drop.

Asked by Mahrukh Adajania from Nuvama

Staff Cost Reduction Drivers Direct
The reduction in staff cost has two variables. Absolute reduction in headcount quarter-on-quarter, which is permanent in nature and there is a one-time reversal of staff expenses that are no longer required to be paid.

Provides specific reasons for the decline in staff costs, distinguishing between permanent operational improvements and one-time adjustments.

Asked by Mahrukh Adajania from Nuvama

Standard Loan Negative Provisions and Credit Cost Direction Direct
the negative in the standard assets provision for the current quarter is driven by the fact that there were sectors that we had marked as stress previously where given the stabilization of the overall loan book, we do not see a stress.

Explains the unusual negative provision, indicating improved asset quality in previously stressed segments.

Asked by Rikin Shah from IIFL Capital

Inorganic Opportunities and Capital Requirement Direct
given the size of possible opportunities, if you take the universe of opportunities available, I don't think there is anything of the size which meets some of the criteria that you mentioned, which will require us to raise capital for that kind of opportunity.

Addresses speculation about large-scale M&A and confirms the bank's current capital position is sufficient for any foreseeable opportunities.

Asked by Abhishek M from HSBC

Retail Asset Book Growth Strategy Direct
we have said that we will grow our asset book through cycles at about 300 basis points better than the industry... We are very clear that we will dial up or dial down depending on the returns that we expect to make in any business.

Clarifies the bank's strategy for retail asset growth, emphasizing selective, RAROC-driven expansion to outperform the industry.

Asked by Rahul Jain from MFS Investment

NII Optimization Timeframe and Future Plans Partial
Our comment for FY'26 was driven by the fact that we make these decisions on a plan cycle basis. So we are due for our plan cycle for FY'27. Once we've made the decision, we'd be happy to communicate.

Indicates that NII optimization is a dynamic, annual planning process, with FY27 plans to be communicated later, suggesting ongoing strategic adjustments.

Asked by Piran Engineer from CLSA

2 min read 6 chapters

Detailed narrative

Strong Growth in Deposits and Advances

Axis Bank continued to deliver strong growth, with month-end deposits increasing 15% YoY and 5% QoQ, and quarterly average balances up 12% YoY and 5% QoQ. Total advances grew 14% YoY and 4% QoQ, with small business, SME, and mid-corporate segments showing robust growth of 22% YoY and 5% QoQ, constituting 24% of total bank loans. CASA balances also grew strongly by 14% YoY and 3% QoQ, contributing to the overall deposit momentum.

Profitability and Operating Performance

The bank reported a PAT of Rs. 6,490 crores for Q3 FY26, a significant 28% QoQ increase and 3% YoY growth. Core operating revenue and core operating profit both grew 7% YoY. The cost to assets ratio improved by 15 bps YoY and 5 bps QoQ to 2.33%, indicating positive operating jaws. Consolidated ROA improved 27 bps QoQ to 1.57%, and ROE improved 264 bps QoQ to 14.15%, reflecting strong overall financial health.

Net Interest Margin (NIM) Dynamics

NIM for Q3 FY26 stood at 3.64%, a 9 bps QoQ decline. This was influenced by a 17 bps QoQ decline in yields on interest-earning assets, partially offset by an 8 bps QoQ reduction in the cost of funds. Management reiterated its 'through cycle' NIM guidance of 3.80%, expressing confidence in achieving it over the duration of the book, despite recent rate cuts and competitive pressures in the deposit market.

Asset Quality and Provisions

Asset quality remained resilient, with GNPA at 1.40% (declined 6 bps QoQ and YoY) and NNPA at 0.42% (declined 2 bps QoQ). The PCR stood at 70%. Net credit cost was 0.76%, down 4 bps YoY, and 0.63% (excluding technical impact), down 17 bps YoY and 1 bps QoQ. Gross slippages for the quarter were Rs. 6,007 crores, with retail contributing Rs. 5,472 crores, while net slippages were Rs. 3,135 crores, declining 11% YoY.

Strategic Focus and Digital Initiatives

The bank continues to focus on building a resilient, all-weather franchise, strengthening its distribution footprint to over 6,000 branches, and leveraging digital platforms. Initiatives like Neo for Corporates and Neo for Business are scaling rapidly, serving over 4.3 lakh and 3.1 lakh customers respectively. The bank also pioneered omni-channel Express Banking Digital Points and introduced a UPI-powered, co-branded Rupay Credit Card with Google Pay, enhancing customer experience and operational efficiency.

Capital Position and Future Outlook

Axis Bank remains well-capitalized with a CET 1 ratio of 14.50%. The bank holds provisions aggregating to Rs. 6,243 crores, providing a capital cushion of approximately 43 bps. Management stated they do not need equity capital for growth or protection and may opportunistically evaluate issuing Tier-2 and AT-1 instruments, with AT1 due in September 2026. The bank aims to sustainably outpace sector growth in the medium to longer term, while remaining vigilant to the evolving geo-political environment.

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