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Elevated credit costs from technical impact
View Risks →Axis Bank Ltd — Q1 FY26
Axis Bank reported Q1 FY26 PAT of INR 5,806 crore, impacted by a technical recognition change that added INR 614 crore to provisions.
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Axis Bank reported Q1 FY26 PAT of INR 5,806 crore, impacted by a technical recognition change that added INR 614 crore to provisions. Operating profit grew 14% YoY, with fee income up 10% YoY. NIM compressed to 3.8%, down 25bps YoY, with further pressure expected in Q2 from repo rate cuts. Asset quality showed elevated gross slippages of INR 8,200 crore (INR 5,491 crore adjusted), but management highlighted stabilization in retail unsecured portfolios. The bank reiterated its ability to grow advances 300bps faster than the industry and maintain 3.8% NIM on a two-cycle basis. Cost growth moderated to 2% YoY. Key risk: elevated credit costs may persist through FY26 as the technical impact flows through, with uncertainty on recovery timelines.
एक्सिस बैंक ने पहली तिमाही में 5,806 करोड़ रुपये का शुद्ध लाभ कमाया। इसमें एक तकनीकी बदलाव के कारण 614 करोड़ रुपये का अतिरिक्त प्रावधान (मुनाफे से अलग रखा गया पैसा) हुआ। परिचालन लाभ सालाना आधार पर 14% बढ़ा, और फीस आय 10% बढ़ी। ब्याज आय मार्जिन (NIM) घटकर 3.8% रह गया, जो पिछले साल से 0.25% कम है। रेपो दर कटौती से अगली तिमाही में और दबाव हो सकता है। खराब कर्ज (NPA) में 8,200 करोड़ रुपये के नए मामले आए, लेकिन रिटेल अनसिक्योर्ड लोन (बिना गारंटी वाले कर्ज) में स्थिरता दिखी। बैंक ने कहा कि वह उद्योग से 3% अधिक तेजी से कर्ज बढ़ाएगा और दो तिमाहियों में 3.8% NIM बनाए रखेगा। लागत वृद्धि सिर्फ 2% रही। जोखिम: तकनीकी बदलाव के कारण कर्ज वसूली में देरी हो सकती है, जिससे प्रावधान अधिक रह सकते हैं।
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Gross Slippage Ratio (adjusted)
2.10%
+13bps YoY
Annualized gross slippage ratio adjusted for technical impact, reflecting underlying asset quality trends.
CASA Ratio
38%
flat QoQ
CASA ratio remained stable sequentially, with savings deposits growing 3% YoY.
Fee-to-Assets Ratio
1.45%
+3bps YoY
Fee income as a percentage of average assets improved, indicating better non-interest income generation.
CET1 Ratio
14.68%
+62bps YoY
Capital adequacy remains strong, with CET1 ratio improving year-on-year, supporting growth plans.
What Changed vs Last Quarter
NEW
Advances growth 300bps faster than industry
Management expects the bank's loan growth to outpace industry average by 300 basis points in the medium term (3-5 years with FY26 as base).
NEW
NIM of 3.8% on a two-cycle basis
The bank targets a net interest margin of 3.8% over a two-cycle period starting from the last rate cut, with margins expected to follow an inverted C trajectory.
NEW
No further policy changes unless regulation changes
Management confirmed that the technical recognition changes are a one-time adjustment and no further policy changes are expected unless regulatory norms change.
DROPPED
FY26 credit cost may be marginally higher than FY25
Due to tightened classification norms for certain accounts (e.g., OTS), slippages in FY26 could be marginally higher than FY25.
DROPPED
Personal loan portfolio to stabilize in a few quarters
Underwriting corrections on personal loans are showing early positive reads, but full stabilization will take a few more quarters.
DROPPED
NIM cushion of ~18 bps above through-cycle guidance
Management aims to retain as much of the 18 bps cushion above the through-cycle NIM of 3.8% as possible, using mix and repricing levers.
NEW RISK
Elevated credit costs from technical impact
Credit costs rose to 1.38% (1.09% adjusted) due to technical recognition changes, and management declined to provide FY26 guidance, leaving uncertainty on normalization pace.
NEW RISK
Retail asset quality normalization timeline
Despite improving early indicators, management has not called a peak in personal loan slippages, and elevated retail slippages may persist longer than expected.
RISK GONE
Personal loan asset quality normalization may take longer
Management noted that personal loan delinquencies may take a few more quarters to stabilize, despite early positive signals from underwriting changes.
RISK GONE
PSLC costs may persist in FY26
The bank incurred INR 591 crore in PSLC purchase costs in Q4 to meet PSL shortfalls, and similar costs may recur in FY26 due to MFI and Gold Loan classification issues.
RISK GONE
Deposit growth still below industry average
Despite QoQ improvement, deposit growth remains below the industry average, and management did not provide a timeline for closing the gap.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q2 FY25, Q3 FY25
Deposit growth will be a key constraint for advances growth in the short to medium term, given regulatory focus on CD ratio.
Mentioned in Q1 FY25, Q2 FY25, Q3 FY25
Management expects advances to grow 300-400 basis points faster than industry in the medium to long term, driven by focus segments.
Mentioned in Q2 FY25, Q3 FY25
Retail slippages, largely from unsecured products, have increased 40-45 bps YoY. Management expects corrective actions to help but does not call a peak.
Mentioned in Q2 FY25, Q3 FY25
RBI draft circular restricts subsidiaries from doing overlapping business. Bank is evaluating implications; uncertainty remains.
Mentioned in Q2 FY25, Q3 FY25
Current LCR of 115% may fall closer to 100% under proposed norms. Bank has tools but final guidelines are awaited.
Fast read
Guidance and risk preview
Management expects the bank's loan growth to outpace industry average by 300 basis points in the medium term (3-5 years with FY26 as base).
Credit costs rose to 1.38% (1.09% adjusted) due to technical recognition changes, and management declined to provide FY26 guidance, leaving uncerta...
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