Axis Bank , one of India's leading private sector banks, has reported its financial results for the first quarter, showing a mixed performance with a decline in net profit, an increase in non-performing assets, and a significant rise in provisions and fresh slippages.

Key Highlights

• Net profit decreased by 4% year-on-year to ₹5,806.00 crore, falling short of estimates
• Revenue increased to ₹311.00 billion from ₹300.60 billion in the previous year
• Gross Non-Performing Asset (GNPA) ratio rose to 1.57% from 1.28% quarter-over-quarter
• Net Non-Performing Asset (NNPA) ratio increased to 0.45% from 0.33% quarter-over-quarter
• Provisions surged to ₹39.50 billion, significantly higher than the previous quarter and analyst estimates
• Fresh slippages increased to ₹82.00 billion, up from ₹48.05 billion in the previous quarter
• UK-listed Global Depository Receipts (GDRs) fell 5% following the disappointing Q1 results

Financial Performance

Axis Bank reported a standalone net profit of ₹5,806.00 crore for the quarter, marking a 4% decrease from ₹6,035.00 crore in the same quarter last year. This figure fell short of the estimated ₹6,350.00 crore. Despite the dip in net profit, the bank's total revenue saw an increase, reaching ₹311.00 billion compared to ₹300.60 billion in the corresponding quarter of the previous year.

Asset Quality and Provisions

The bank's asset quality metrics for the quarter showed some deterioration:

The Gross Non-Performing Asset (GNPA) ratio rose to 1.57%, exceeding the estimated 1.37%. This increase in NPAs warrants close monitoring in the coming quarters.

Notably, Axis Bank's provisions for the first quarter increased substantially to ₹39.50 billion, up from ₹13.60 billion in the previous quarter. This figure significantly exceeded analyst estimates of ₹22.62 billion, indicating a more conservative approach to risk management by the bank.

Further adding to concerns, fresh slippages for the first quarter rose to ₹82.00 billion, compared to ₹48.05 billion in the previous quarter, representing a significant quarter-on-quarter increase.

Market Reaction and Management Commentary

The disappointing Q1 results had an immediate impact on the bank's UK-listed Global Depository Receipts (GDRs), which fell by 5%. This decline reflects investor concerns about the bank's performance and outlook.

Addressing these concerns, CFO Puneet Sharma provided some context to the results. He stated that a full book reassessment was conducted in Q1, suggesting that the bank has taken a thorough and conservative approach to evaluating its assets. Sharma also indicated that the impact of this reassessment is expected to be minimal in subsequent quarters, potentially alleviating some investor worries about ongoing asset quality issues.

Other Financial Metrics

While the bank's Net Interest Income (NII) figures were not provided in the update, the increase in overall revenue suggests that other income streams may have contributed to offsetting any potential flatness in NII.

Conclusion

Axis Bank's Q1 results present a challenging picture. While the bank managed to increase its revenue, the decline in net profit, the rise in non-performing assets, the significant increase in provisions, and the surge in fresh slippages indicate difficulties in the current economic environment. The bank's performance falling short of estimates has led to an immediate negative market reaction, as evidenced by the drop in its GDRs.

However, management's commentary about the full book reassessment and expectations of minimal impact in future quarters provides some context to the results. Axis Bank will need to focus on improving its asset quality, managing its provisioning strategy, and boosting profitability to meet market expectations and regain investor confidence in future reporting periods.

Axis Bank , one of India's leading private sector banks, is set to release its Q1 FY26 financial results, with analysts projecting a mixed performance. The bank is expected to show resilience in profit growth despite facing challenges in net interest income (NII) and margins.

Profit Growth and Revenue Outlook

Analysts anticipate Axis Bank's profit after tax (PAT) to increase by 5% year-on-year (YoY) to Rs 6,375.77 crore in Q1 FY26. This growth comes despite projections of a 4% YoY decline in Net Interest Income (NII) to Rs 13,970.00 crore.

Margin Pressure and Loan Growth

The bank is likely to face some pressure on its Net Interest Margin (NIM), which is expected to decrease to 3.81% from 3.97% quarter-on-quarter (QoQ). However, Axis Bank is estimated to maintain a steady loan growth of 7% YoY, indicating continued demand for credit despite challenging market conditions.

Asset Quality and Operational Expenses

Analysts predict elevated slippages and increased provisions for Axis Bank in Q1 FY26, which could impact the overall asset quality. Additionally, operating expenses are anticipated to rise, primarily due to annual appraisals.

Strong Credit Rating Reaffirmed

In a recent development, credit rating agency CRISIL has reaffirmed its 'CRISIL AAA/CRISIL AA+/Stable/CRISIL A1+' ratings on various debt instruments of Axis Bank. This reaffirmation reflects the bank's strong market position, healthy capitalization, and comfortable resource profile.

CRISIL has also assigned its 'CRISIL AAA/Stable' rating to the bank's Rs 8,000.00 crore infrastructure bonds, highlighting confidence in Axis Bank's financial strength and stability.

Key Financial Indicators

As of March 31, 2025, Axis Bank reported the following consolidated financial metrics:

Outlook

While Axis Bank is expected to face some challenges in Q1 FY26, particularly in terms of NII and margins, the projected profit growth and steady loan expansion indicate the bank's resilience. The reaffirmation of high credit ratings by CRISIL further underscores the bank's strong financial position and market standing.

Investors and analysts will be closely watching Axis Bank's Q1 FY26 results for further insights into its performance and strategies to navigate the current economic environment.