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View Promises →Axis Bank Ltd — Q4 FY25
Axis Bank reported a steady Q4 FY25 with core operating profit up 11% YoY and NIM improving 4 bps QoQ to 3.97%.
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Axis Bank reported a steady Q4 FY25 with core operating profit up 11% YoY and NIM improving 4 bps QoQ to 3.97%. PAT was flat YoY at INR 7,117 crore, impacted by higher provisions and PSLC costs. Deposit growth picked up 7% QoQ, driven by strong NED inflows, while loan growth remained modest at 8% YoY. Management highlighted stabilization in credit card delinquencies but cautioned that personal loan asset quality may take a few more quarters to improve. The bank tightened classification norms for certain accounts, which could marginally increase slippages in FY26. Key risks include prolonged normalization in unsecured retail asset quality and potential margin compression from the rate cut cycle. Guidance remains qualitative, with no specific FY26 targets provided.
एक्सिस बैंक ने चौथी तिमाही में अच्छा प्रदर्शन किया। मुख्य कारोबारी मुनाफा 11% बढ़ा। ब्याज आय और खर्च का अंतर (NIM) थोड़ा सुधरकर 3.97% हुआ। कुल मुनाफा (PAT) 7,117 करोड़ रुपये रहा, जो पिछले साल जितना ही है। ज्यादा प्रावधानों और PSLC लागत के कारण यह नहीं बढ़ा। जमा में 7% की बढ़ोतरी हुई, खासकर बिना ब्याज वाली जमा (NED) से। कर्ज में सिर्फ 8% की बढ़ोतरी हुई। क्रेडिट कार्ड के बकाया भुगतान में सुधार दिख रहा है, लेकिन पर्सनल लोन की वसूली में अभी कुछ समय लगेगा। बैंक ने कुछ खातों के वर्गीकरण के नियम सख्त किए हैं, जिससे अगले साल थोड़े और खाते खराब हो सकते हैं। ब्याज दरों में कटौती से मुनाफा कम होने का खतरा है। बैंक ने अगले साल के लिए कोई ठोस लक्ष्य नहीं दिया है।
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Personal loan asset quality normalization may take longer
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Read Transcript →Quarter Snapshot
Core Operating Profit
INR 10,575 crore
+11% YoY
Core operating profit grew 11% year-on-year and 5% quarter-on-quarter.
NIM
3.97%
+4 bps QoQ
Net interest margin improved 4 basis points sequentially to 3.97%.
Gross NPA
1.28%
-15 bps YoY
Gross NPA declined 15 basis points year-on-year to 1.28%.
CASA Ratio (NED)
41%
+127 bps QoQ
CASA ratio on NED basis improved 127 basis points quarter-on-quarter to 41%.
What Changed vs Last Quarter
NEW
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.
NEW
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.
NEW
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.
DROPPED
Medium-term loan growth 300-400 bps above industry
Management expects advances to grow 300-400 basis points faster than industry in the medium to long term, driven by focus segments.
DROPPED
Deposit growth to remain a key constraint in short term
Deposit growth will be a key constraint for advances growth in the short to medium term, given regulatory focus on CD ratio.
DROPPED
No need for equity capital; may issue Tier 2/AT1
Bank does not need equity capital for growth or protection; may opportunistically evaluate Tier 2 and AT1 instruments.
NEW RISK
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.
NEW RISK
Margin compression from rate cuts
With repo-linked loans repricing faster than deposits, NIMs could face pressure in a rate cut cycle, though management expects to offset via mix and savings rate cuts.
NEW RISK
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.
NEW RISK
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.
RISK GONE
Unsecured retail slippages may persist
Retail slippages, largely from unsecured products, have increased 40-45 bps YoY. Management expects corrective actions to help but does not call a peak.
RISK GONE
RBI draft circular on subsidiary overlap
RBI draft circular restricts subsidiaries from doing overlapping business. Bank is evaluating implications; uncertainty remains.
RISK GONE
LCR pressure from new draft norms
Current LCR of 115% may fall closer to 100% under proposed norms. Bank has tools but final guidelines are awaited.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q2 FY25, Q3 FY25, Q4 FY24
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 FY24, Q2 FY25, Q3 FY24, 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 FY24, Q3 FY24
Tight liquidity and rising deposit costs could limit the bank's ability to grow loans at the desired pace, potentially compressing NIMs.
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.
Fast read
Guidance and risk preview
Due to tightened classification norms for certain accounts (e.g., OTS), slippages in FY26 could be marginally higher than FY25.
Management noted that personal loan delinquencies may take a few more quarters to stabilize, despite early positive signals from underwriting changes.
View Risks →