Skip to content

    Axis Bank

    AXISBANKGood
    Financial Services·17 Jul 2025
    Management Summary

    Q1 FY26 was impacted by the implementation of more stringent NPA classification criteria (technical impact) and the beginning of rate cut transmission. Excluding technical impact, operating performance remained steady. Management reaffirmed through-cycle NIM guidance of 3.80% and signaled confidence in growing faster than industry. Cards portfolio stabilizing; personal loans showing early positive signs from underwriting corrections.

    Highlights

    8

    • Operating profit at Rs 11,515 crores, up 14% YOY and 7% QOQ

    • NIM at 3.80%, down 17bps QOQ due to rate cuts; NII up 1% YOY, down 2% QOQ

    • Technical impact of NPA classification changes: Rs 2,709 crores of gross slippages attributed to technical changes

    • Consolidated ROA at 1.51% (1.66% ex-technical); ROE at 13.57% (14.9% ex-technical)

    • Non-interest income up 25% YOY; fee income up 10% YOY with granular fee at 91%

    • Advances grew 8% YOY; SBB+SME+Mid-corporate at 23% of loans, up 820bps over 4 years

    • CET1 ratio at 14.68%, up 62bps YOY; cost-to-assets at 2.41%, down 13bps YOY

    • Through-cycle NIM guidance of 3.80% reaffirmed; expects margin trajectory to follow inverted-C pattern

    Concerns

    1

    • 75% of retail slippages (ex-agri, ex-technical) from unsecured book

    Key financials

    Single quarter

    07 metrics
    1. 01NII—+1%YoY
    2. 02NIM3.8%
    3. 03Operating Profit₹11,515 Cr+14.0%YoY
    4. 04GNPA (reported)1.6%
    5. 05GNPA (ex-technical)1.4%

    Guidance & targets

    3
    CategoryTargetPriority
    NIM
    Through-cycle NIM
    3.80%
    		High
    Credit Growth
    Growth vs industry
    Faster than industry
    		High
    Asset Quality
    Technical impact trajectory
    More muted in subsequent quarters
    		High

    Risks & concerns

    5
    RiskSeverity

    Technical impact from NPA classification changes inflating reported slippages by Rs 2,709 crores

    Stock correction in Q1 due to full-book reassessment. Flow impact expected to be more muted going forward. 80% of slipped contracts are fully secured. — Both acknowledged

    medium

    NIM compressed 17bps QOQ to 3.80% with further rate cut transmission pending

    75bps of rate cuts yet to fully transmit in next quarter. Management confident of through-cycle 3.80% NIM. — Both acknowledged

    medium

    75% of retail slippages (ex-agri, ex-technical) from unsecured book

    Cards stabilizing, PL needs more time. Early signs positive from underwriting corrections. — Management acknowledged

    high

    Rajiv Anand (Deputy MD) retiring - leadership transition

    NRC actively looking at third ED appointment. Acknowledged his 16-year contribution. — Management acknowledged

    low

    Areas of Evasion(1)

    • Would not provide product-level slippage breakdowns beyond broad commentary

    Q&A highlights

    4

    “We have not changed any day-past-due parameters. The qualitative parameters, we benchmark the most prudent in market on an annual basis.”

    Clarifies that the technical impact is from self-initiated policy tightening, not regulatory action

    asked by Ritu Singh (CNBC)

    1 min read5 chapters

    Detailed Narrative

    01

    Technical Impact Dominates Asset Quality Narrative

    Gross slippages of Rs 8,200 crores included Rs 2,709 crores from technical changes to NPA classification. The changes related to cash credit/overdraft products and one-time📎 settlement accounts. Management confirmed this is the end of policy corrections and expects flow impact to be more muted. Net slippages adjusted for technical impact at Rs 4,192 crores. 80% of technically slipped contracts are fully secured.

    02

    Rate Cut Transmission and Margin Pressure

    NIM declined 17bps QOQ to 3.80% as 100bps of RBI rate cuts began transmitting. 25bps fully passed through in Q1; remaining 75bps partially transmitted. Cost of funds declined 11bps YOY and 5bps QOQ. Management reaffirmed through-cycle NIM of 3.80% and described margin trajectory as an inverted-C shape - initial drop followed by recoupment over 15-18 months.

    03

    Expense Discipline and Operating Leverage

    Operating expenses grew only 2% YOY and declined 5% QOQ, delivering positive operating jaws. Cost-to-assets at 2.41% declined 13bps YOY. Operating profit grew 14% YOY to Rs 11,515 crores aided by strong non-interest income growth of 25% YOY.

    04

    Wholesale Growth Offsets Retail Moderation

    SBB+SME+Mid-corporate grew to 23% of total loans (up 820bps over 4 years). Mid-corporate grew 24% YOY and 15% QOQ. Corporate loans grew 9% YOY, 6% QOQ. Retail loans grew 6% YOY with home loans flat but LAP growing. Wholesale growth driven by sector-specific demand and strong refinancing activity.

    05

    Digital Momentum and Payments Leadership

    Mobile banking app at 15 million active monthly users with top ratings. 0.79 million credit cards acquired in Q1. Cards in force market share at 14%. Neo platform migration reached 80% of eligible corporate clients. Adi, Gen AI-powered assistant, saw 66% increase in usage.

    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.