Mumbai (Economy India): Axis Bank on Monday reported a modest yet resilient performance for the December quarter of FY26, with its consolidated net profit rising 4 per cent year-on-year to ₹7,010.65 crore, compared to ₹6,742.99 crore in the corresponding period last year. The results reflect steady loan growth and controlled asset quality, even as the bank navigated margin pressures amid a challenging interest rate environment.
On a standalone basis, the country’s third-largest private sector lender posted a net profit of ₹6,489.57 crore for the October–December quarter, up from ₹6,303.77 crore a year ago.
Net Interest Income Grows, Margins Under Pressure
Axis Bank’s core net interest income (NII)—a key measure of lending profitability—rose 5 per cent to ₹14,287 crore, supported by a healthy 14 per cent growth in overall loan book. However, profitability was partially constrained by a 29 basis point compression in net interest margin (NIM), which declined to 3.64 per cent.
The margin pressure reflects higher funding costs and intense competition for deposits across the banking system, as lenders continue to offer attractive rates to retain and grow their deposit base.
Retail Loans Drive Growth Momentum
Retail lending remained a key growth engine for Axis Bank during the quarter, with the segment registering 6 per cent year-on-year growth. The bank saw sustained demand across home loans, personal loans, credit cards, and vehicle finance, underscoring continued consumer resilience despite global economic uncertainties.
Retail assets now form a significant portion of the bank’s overall loan mix, helping diversify risk and provide stability against cyclical stress in corporate lending.
Corporate and SME Credit Remains Stable
Corporate and SME lending also showed steady traction, aided by improved balance sheets, infrastructure spending, and selective private capital expenditure. However, management maintained a cautious stance amid global volatility, currency pressures, and geopolitical uncertainties that could impact export-oriented businesses.
Asset Quality Remains Comfortable
Axis Bank’s asset quality indicators remained broadly stable during the quarter, reflecting disciplined underwriting and effective recovery mechanisms. Gross and net non-performing asset ratios were largely contained, supported by recoveries, upgrades, and prudent provisioning.
Analysts noted that while credit costs remained under control, banks may need to stay vigilant in the coming quarters as global financial conditions tighten and domestic interest rates remain elevated.
Deposit Growth and Liquidity Position
The bank continued to focus on strengthening its deposit franchise, particularly low-cost current and savings account (CASA) deposits. While deposit growth trailed loan expansion—an industry-wide trend—Axis Bank maintained a comfortable liquidity profile, supported by diversified funding sources.
Higher term deposit mobilisation helped bridge the funding gap, though at the cost of elevated interest expenses, contributing to margin compression.
Management Outlook
Axis Bank’s management remains cautiously optimistic about the medium-term outlook, banking on:
- Sustained retail credit demand
- Stable corporate balance sheets
- Controlled asset quality
- Gradual improvement in margins once funding costs stabilise
However, near-term challenges include volatile global markets, foreign capital outflows, pressure on the rupee, and uncertainty around global interest rate trajectories.
Banking Sector Context
Axis Bank’s Q3 performance mirrors broader trends across India’s private banking sector, where lenders are delivering moderate profit growth, strong credit expansion, but facing margin headwinds due to rising deposit costs. Analysts expect profitability to remain stable rather than spectacular in the near term, with focus shifting toward balance sheet strength and sustainable growth.
(Economy India)
