Axis Bank , one of India's leading private sector banks, has reported mixed financial results for the first quarter of fiscal year 2026 (Q1FY26). The bank saw growth in operating profit but a decline in net profit compared to the same period last year.

Operating Performance

Axis Bank's operating profit for Q1FY26 grew 14% year-over-year (YoY) to ₹11,515.00 crores, up from ₹10,106.00 crores in Q1FY25. This growth was driven by higher non-interest income and effective cost control. The bank's operating revenue increased by 8% YoY, while operating expenses grew by only 2% YoY.

Net Profit and Income

Despite the growth in operating profit, the bank's net profit decreased by 4% YoY to ₹5,806.00 crores in Q1FY26, compared to ₹6,035.00 crores in Q1FY25. This decline was primarily due to higher provisions and contingencies, which stood at ₹3,948.00 crores for the quarter, up 94% from ₹2,039.00 crores in the same quarter last year.

The bank's net interest income (NII) saw a modest 1% YoY increase to ₹13,560.00 crores. However, non-interest income grew significantly by 25% YoY to ₹7,258.00 crores, with fee income up 10% YoY to ₹5,746.00 crores.

Asset Quality

Axis Bank reported a slight increase in its gross non-performing assets (GNPA) ratio, which stood at 1.57% as of June 30, 2025, compared to 1.54% a year ago. The net NPA ratio also increased to 0.45% from 0.34% in the same period last year.

The bank attributed changes in asset quality parameters to the application of technical parameters for recognizing slippages and consequent upgrades, which it referred to as "Technical Impact."

Business Growth

The bank's advances grew by 8% YoY to ₹10,59,724.00 crores, with retail loans growing by 6% YoY. Total deposits increased by 9% YoY to ₹11,61,615.00 crores.

Digital Banking and Market Position

Axis Bank continued to maintain its strong position in digital banking and payments. It holds a market-leading position in the UPI Payer PSP space with a market share of approximately 32%. The bank also remains among the largest players in the merchant acquiring business with a terminal market share of about 19.7%.

Management Commentary

Amitabh Chaudhry, MD & CEO of Axis Bank, expressed optimism about the bank's future, stating, "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, innovative product suites are best suited to seize the opportunity."

Conclusion

While Axis Bank faced some challenges in Q1FY26, particularly in terms of net profit and asset quality, the bank demonstrated strength in its operating performance, business growth, and digital banking initiatives. The management remains confident about the bank's ability to capitalize on market opportunities in the coming quarters.

Investors and analysts will be watching closely to see how the bank navigates the evolving financial landscape and addresses the factors impacting its profitability in the subsequent quarters.

Axis Bank , India's third-largest private sector lender, reported a 4% year-on-year decline in net profit for the first quarter, as higher provisions offset growth in core income.

Key Highlights

• Net profit fell to ₹5,806.00 crore from ₹6,035.00 crore in the same quarter last year
• Net interest income (NII) grew marginally by 1% to ₹13,560.00 crore
• Non-interest income surged 25% to ₹7,258.00 crore
• Operating profit rose 14% to ₹11,515.00 crore
• Provisions nearly doubled to ₹3,948.00 crore from ₹2,039.00 crore a year ago

Asset Quality Impacted by Technical Factors

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 upgrades. As a result:

• Gross non-performing assets (NPAs) ratio rose to 1.57% from 1.54% a year ago
• Net NPA ratio increased to 0.45% from 0.34% in the same quarter last year
• Provision coverage ratio declined to 71% from 78% a year earlier

Excluding the Technical Impact, the gross NPA ratio would have been 1.41% and net NPA ratio 0.36%.

Strong Growth in Core Income

Despite the dip in profits, Axis Bank saw healthy growth in its core income streams:

• Fee income grew 10% year-on-year to ₹5,746.00 crore
• Retail fees rose 9%, constituting 70% of total fee income
• Corporate and commercial banking fees increased 13% to ₹1,695.00 crore

Steady Loan Growth

The bank's advances grew 8% year-on-year to ₹10,59,724.00 crore as of June 30. Retail loans, which account for 59% of the total loan book, grew 6% to ₹6,22,960.00 crore.

Capital Position Remains Strong

Axis Bank maintained a robust capital position, with its Capital Adequacy Ratio (CAR) standing at 16.85% and CET1 ratio at 14.68% as of June 30.

Management Commentary

Amitabh Chaudhry, MD & CEO of Axis Bank, stated: "We are optimistic as we step into the new fiscal year. 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."

Analyst Reactions

Following the Q1 results, Nuvama and JPMorgan downgraded Axis Bank stock, citing concerns over Net Interest Margins (NIMs) and limited upside potential. Nuvama reduced its price target to ₹1,180.00 from ₹1,400.00, while JPMorgan lowered it to ₹1,265.00 from ₹1,315.00. However, other firms like Bernstein, CLSA, and Investec maintained positive ratings with slight price target adjustments.

Out of 52 analysts covering the stock, 42 maintain 'buy' ratings and 10 have 'hold' ratings, with no 'sell' recommendations.

Outlook

While the increase in provisions and technical impact on asset quality metrics are near-term challenges, Axis Bank's strong core income growth and robust capital position provide a solid foundation for future growth. The bank's focus on digital initiatives and its optimistic outlook on the operating environment suggest it is well-positioned to capitalize on opportunities in the evolving banking landscape. However, investors should consider the recent analyst downgrades and concerns over NIMs when evaluating the stock.