Shares of private lender Axis Bank tumbled 7.4 per cent to an intrday low of Rs 1,073.95 apiece on the BSE after posting results for the first quarter of the current fiscal year (Q1 FY26). As of 11:20 AM, the lender’s shares traded at Rs 1,112 apiece, down 4.13 per cent.
Axis Bank’s standalone net profit fell 4 per cent year-on-year (YoY) to Rs 5,806 crore for Q1 FY26, as against Rs 6,035 crore in the same quarter last year.
Net Interest Income (NII) rose 1 per cent YoY and fell 2 per cent sequentially. Net Interest Margin (NIM) came in at 3.80 per cent. Non-interest income surged 25 per cent YoY, led by a 10 per cent growth in fee income.
Loan growth remained healthy as advances rose 8 per cent YoY. Deposit growth was 9 per cent YoY, and current account and savings account (CASA) ratio softened to 40 per cent.
Axis Bank's asset quality slipped slightly. Gross net performing assets (GNPA) rose 29 basis points (bps) quarter-on-quarter (QoQ) to 1.57 per cent, and net NPA increased to 0.45 per cent. Net credit cost climbed to 1.38 per cent.
Capital adequacy was strong for the quarter, coming in at 16.85 per cent. Provisions were at Rs 5,012 crore.
The private bank's subsidiaries posted a combined profit of Rs 451 crore, up 4 per cent YoY. Axis Finance and Axis AMC reported double-digit earnings growth.
What Brokerages Say
Motilal Oswal said Axis Bank’s Q1 FY26 earnings were broadly in-line with their expectations, as lower operating expenses and strong other income helped offset higher provisions.
However, the brokerage flagged a sharp 17 basis point QoQ decline in net interest margins, partly due to repo rate cuts. Asset quality also weakened, with higher slippages driven by stricter loan classification norms introduced by the bank, the brokerage said.
Axis Bank plans to complete this reclassification exercise by Q2, which Motilal Oswal noted could keep slippages and credit costs elevated in the near term.
Motilal Oswal has cut its earnings estimates for Axis Bank by 8.6 per cent for FY26 and 5.7 per cent for FY27, citing higher credit costs and pressure on margins.
JM Financial said Axis Bank’s Q1 FY26 operating performance was strong, supported by lower operating expenses. However, profitability was hit by higher credit costs due to technical slippages from changes in NPA recognition norms.
The brokerage expects growth to pick up in the coming quarters as liquidity improves and credit costs normalize. It values the core bank at 1.4x FY27 estimated book value and believes a sustained re-rating will depend on a stronger earnings trajectory.
JM Financial has cut its FY26 earnings estimate by 5 per cent to factor in higher credit costs.
