Axis Bank , India's third-largest private sector bank, has released its financial results for the first quarter, showcasing a mixed performance with strong operational growth but some asset quality challenges.

Operating Performance

The bank reported a robust 14% year-over-year increase in operating profit, which reached ₹11,515.00 crore for Q1. This growth was driven by a 25% jump in non-interest income and effective cost control measures. Fee income grew by 10% YoY, with retail fees up 9% YoY. The bank maintained positive operating jaws, with operating revenue up 8% YoY while operating expenses grew only 2% YoY.

Net Interest Income and Margins

Net Interest Income (NII) saw a modest 1% YoY growth to ₹13,560.00 crore. However, the Net Interest Margin (NIM) contracted to 3.80% for the quarter, down from 4.05% in the same quarter of the previous year.

Asset Quality

The bank's asset quality metrics were impacted by what it termed as "Technical Impact" - the prudent application of technical parameters for recognizing slippages and consequent upgrades. As a result:

• Gross Non-Performing Assets (GNPA) ratio stood at 1.57%, up from 1.28% in the previous quarter
• Net Non-Performing Assets (NNPA) ratio increased to 0.45% from 0.33% in the previous quarter
• Provision Coverage Ratio (PCR) declined to 71% from 75% in the previous quarter

The bank stated that this Technical Impact adversely affected its Profit After Tax by ₹614.00 crores, Return on Assets by 15 basis points, and Return on Equity by 1.4%.

Loan and Deposit Growth

Advances grew by 8% YoY and 2% QoQ to ₹10,59,724.00 crore. The bank's focus segments, including Small Business Banking (SBB), SME, and Mid-Corporate, showed healthy growth. Total deposits increased by 9% YoY to ₹11,61,615.00 crore.

Digital Banking and Payments

Axis Bank maintained its strong position in digital banking and payments:

• Continued market leadership in UPI Payer PSP space with ~32% market share
• Ranked among the largest players in Merchant Acquiring business with ~19.7% terminal market share
• Acquired ~0.79 million new credit cards in Q1

Capital Position

The bank's capital position remained strong, with Capital Adequacy Ratio (CAR) at 16.85% and CET1 ratio at 14.68%. The bank reported a net accretion to CET-1 of 62 bps YoY and 1 bps in Q1.

Commenting on the results, Amitabh Chaudhry, MD & CEO of Axis Bank, said, "We are optimistic as we step into the new fiscal year. With supportive regulatory conditions, the operative landscape is turning favourable. We believe large, well-capitalised banks like Axis with strong digital capabilities, innovative product suites are best suited to seize the opportunity."

Despite the challenges in asset quality, Axis Bank's strong operational performance and digital banking initiatives position it well to capitalize on the evolving banking landscape in India.

Axis Bank , India's third-largest private sector bank, announced its financial results for the first quarter of fiscal year 2026 (Q1 FY26) on July 17, 2025. The bank reported a robust 14% year-over-year (YoY) growth in operating profit, driven by higher non-interest income and effective cost control measures.

Key Financial Highlights

• Operating profit increased by 14% YoY to ₹11,515.00 crore in Q1 FY26
• Net Interest Income (NII) grew by 1% YoY to ₹13,560.00 crore
• Non-interest income surged by 25% YoY, with fee income up by 10%
• Net profit declined by 4% YoY to ₹5,806.00 crore, impacted by technical factors
• Cost to assets ratio improved to 2.41%, down 13 basis points YoY

Asset Quality and Provisions

The bank's asset quality metrics were affected by what it termed as "Technical Impact," which is largely restricted to cash credit and overdraft products and one-time settled accounts. As a result:

• Gross Non-Performing Assets (GNPA) ratio stood at 1.57%, up from 1.28% in the previous quarter
• Net Non-Performing Assets (NNPA) ratio increased to 0.45% from 0.33% in Q4 FY25
• Provision Coverage Ratio (PCR) was at 71%
• Credit cost (annualized) for Q1 FY26 was 1.38%

The bank stated that ₹821.00 crore of provisions and contingencies debited to the Profit and Loss Account is attributable to this Technical Impact.

Business Growth

Axis Bank continued to show strong growth across various business segments:

• Total deposits grew by 9% YoY, with CASA (Current Account Savings Account) deposits ratio at 40%
• Advances increased by 8% YoY and 2% quarter-on-quarter (QoQ) to ₹10,59,724.00 crore
• Retail loans grew by 6% YoY, accounting for 59% of the net advances
• SME loans saw a robust growth of 16% YoY

Digital Banking and Payments

The bank maintained its strong position in digital banking and payments:

• Axis Bank holds a market-leading position in UPI Payer PSP space with a market share of ~32%
• ~0.79 million credit cards were acquired in Q1 FY26
• The bank's mobile app, 'open by Axis Bank', continues to be among the world's top-rated mobile banking apps

Management Commentary

Amitabh Chaudhry, MD & CEO of Axis Bank, commented on the results: "We are optimistic as we step into FY26. With supportive regulatory conditions, the operative landscape is turning favorable. We believe large, well-capitalized banks like Axis with strong digital capabilities and innovative product suites are best suited to seize the opportunity."

Capital Adequacy and Liquidity

The bank maintains a strong capital position with:

• Overall Capital Adequacy Ratio (CAR) at 16.85%
• CET1 ratio at 14.68%, up 62 basis points YoY
• Average Liquidity Coverage Ratio (LCR) during Q1 FY26 at ~119%

Despite the impact of technical factors on asset quality, Axis Bank's Q1 FY26 results demonstrate its resilience and growth potential in key business areas. The bank's focus on digital banking, strong deposit growth, and improved cost efficiency positions it well for future growth in the evolving banking landscape.

Consolidated Performance

On a consolidated basis, the Axis Bank Group reported:

• Net profit of ₹6,244.00 crore for Q1 FY26
• Total income of ₹40,401.00 crore, up from ₹37,796.00 crore in Q1 FY25
• Consolidated Return on Equity (ROE) at 13.57%

The bank's subsidiaries also showed steady performance, contributing to the overall growth of the Axis Bank Group.

As Axis Bank navigates through the technical impact on its asset quality, its strong operational performance and strategic initiatives in digital banking and customer-centric products are expected to drive sustainable growth in the coming quarters.