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View Promises →Axis Bank Ltd — Q2 FY26
Axis Bank reported a steady Q2 FY26 with PAT of INR 5,090 crore, though net interest margin declined to 3.73% due to rate cuts.
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Axis Bank reported a steady Q2 FY26 with PAT of INR 5,090 crore, though net interest margin declined to 3.73% due to rate cuts. Advances grew 12% YoY and deposits 11% YoY, with market share gains. Credit card portfolio crossed 15 million cards and UPI market share exceeded 35%. Asset quality showed stabilization in unsecured retail, with gross slippages declining sequentially. A one-time standard asset provision of INR 1,231 crore was made for discontinued crop loan variants, which is non-cash and reversible. Management guided NIM to bottom in Q3 and reiterated medium-term advances growth of 300 bps above industry. Key risk: further one-off regulatory provisions could emerge, as seen this quarter.
एक्सिस बैंक ने दूसरी तिमाही में 5,090 करोड़ रुपये का शुद्ध लाभ कमाया। ब्याज दरों में कटौती के कारण बैंक की ब्याज आय का मार्जिन घटकर 3.73% रह गया। कर्ज देने में 12% और जमा में 11% की बढ़ोतरी हुई। क्रेडिट कार्ड ग्राहकों की संख्या 1.5 करोड़ पार कर गई और UPI बाजार हिस्सेदारी 35% से अधिक रही। असुरक्षित कर्ज में सुधार दिखा, खराब कर्ज कम हुआ। बैंक ने कुछ फसल ऋण योजनाओं के लिए 1,231 करोड़ रुपये का प्रावधान किया, जो नकद खर्च नहीं है और बाद में वापस लिया जा सकता है। प्रबंधन का अनुमान है कि ब्याज मार्जिन अगली तिमाही में सबसे नीचे पहुंचेगा और कर्ज वृद्धि उद्योग से 3% अधिक रहेगी। जोखिम: नियामक की ओर से और एकमुश्त प्रावधान आ सकते हैं।
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Further one-off regulatory provisions
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Read Transcript →Quarter Snapshot
Credit cards in force
15M
+1M QoQ
Card issuances increased to over 1 million in the quarter, crossing 15 million total cards.
UPI market share
35%+
flat
Axis Bank maintains leadership as top UPI payee by value and volume.
Gross slippage ratio
declined 102 bps QoQ
-102 bps QoQ
Gross slippages fell to INR 5,696 crore, with ratio improving sequentially.
CET1 ratio
14.43%
+31 bps YoY
Capital position remains strong, with net accretion of 31 bps YoY.
What Changed vs Last Quarter
NEW
NIM to bottom in Q3 FY26
Assuming no further rate cuts, net interest margin is expected to bottom in Q3, with through-cycle stance at 3.8%.
NEW
Advances growth 300 bps above industry in medium term
Over 3-5 years with FY26 as base, advances are expected to grow 300 bps faster than industry.
NEW
One-time standard asset provision of INR 1,231 crore to reverse by March 2028
The provision is static and will be written back when loans are closed or by 31 March 2028, whichever is earlier.
DROPPED
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).
DROPPED
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.
DROPPED
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.
NEW RISK
Further one-off regulatory provisions
Management acknowledged past one-offs and cannot guarantee no future regulatory surprises, despite conservative stance.
NEW RISK
Margin pressure from rate cuts
NIM declined 7 bps QoQ to 3.73%; further rate cuts could delay margin bottoming beyond Q3.
NEW RISK
Government deposit compression
Government deposit balances continue to decline due to efficiency improvements, with no timeline for offset.
NEW RISK
ECL transition impact on capital
While initial assessment shows negligible impact, final circular could require higher provisions if PDs are elevated.
RISK GONE
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.
RISK GONE
NIM compression from repo rate cuts
Full impact of 75bps repo rate cut will flow through in Q2 FY26, pressuring NIM further, with management only guiding on a two-cycle basis rather than quarterly.
RISK GONE
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.
🤫 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 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.
Mentioned in Q1 FY26, Q4 FY25
Despite improving early indicators, management has not called a peak in personal loan slippages, and elevated retail slippages may persist longer than expected.
Fast read
Guidance and risk preview
Assuming no further rate cuts, net interest margin is expected to bottom in Q3, with through-cycle stance at 3.8%.
Management acknowledged past one-offs and cannot guarantee no future regulatory surprises, despite conservative stance.
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