Axis Bank , India's third-largest private sector bank, announced its financial results for the first quarter. The bank reported a mixed performance, with strong growth in operating profit but challenges in asset quality due to technical factors.

Key Highlights:

• Operating profit increased by 14% year-over-year (YOY) to ₹11,515.00 crore
• Net profit declined by 4% YOY to ₹5,806.00 crore
• Net Interest Income (NII) grew marginally by 1% YOY to ₹13,560.00 crore
• Non-interest income surged by 25% YOY to ₹7,258.00 crore
• Gross Non-Performing Assets (GNPA) ratio stood at 1.57%, up from 1.28% in the previous quarter

Strong Operating Performance

Axis Bank demonstrated robust growth in its core operating metrics. The bank's operating profit increased by 14% YOY to ₹11,515.00 crore, driven by higher non-interest income and effective cost control. Non-interest income grew significantly by 25% YOY to ₹7,258.00 crore, with fee income rising by 10% YOY to ₹5,746.00 crore.

The bank's cost-to-assets ratio improved to 2.41%, declining by 13 basis points YOY and 5 basis points quarter-on-quarter (QOQ). This improvement reflects the bank's focus on operational efficiency and cost management.

Asset Quality Impacted by Technical Factors

Axis Bank reported a rise in its Gross Non-Performing Assets (GNPA) ratio, which stood at 1.57% as of the quarter-end, compared to 1.28% in the previous quarter. The Net Non-Performing Assets (NNPA) ratio also increased to 0.45% from 0.33% in the previous quarter.

The bank attributed this increase to the prudent application of technical parameters for recognizing slippages and consequent upgrades, which impacted the reported asset quality parameters. This "Technical Impact" was largely restricted to cash credit and overdraft products and one-time settled accounts.

Excluding the Technical Impact, the GNPA ratio would have been 1.41%, and the NNPA ratio would have been 0.36%. The bank stated that 80% of individual contracts that slipped due to Technical Impact and continue to remain NPA are fully secured.

Business Growth and Digital Initiatives

Axis Bank continued to show growth across various business segments:

• Advances grew by 8% YOY and 2% QOQ to ₹10,59,724.00 crore
• Total deposits increased by 9% YOY to ₹11,61,615.00 crore
• Retail loans grew by 6% YOY, while SME loans increased by 16% YOY

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

• Continued market leadership in UPI Payer PSP space with a market share of ~32%
• Acquired ~0.79 million new credit cards in the quarter
• Axis Mobile app rated 4.7 on Google Play Store and 4.8 on iOS App Store

Management Commentary

Amitabh Chaudhry, MD & CEO of Axis Bank, commented on the results: "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."

Conclusion

While Axis Bank's quarterly results show strong growth in operating performance and business segments, the impact on asset quality due to technical factors will be an area to watch in the coming quarters. The bank's continued focus on digital initiatives and its strong capital position (CET1 ratio of 14.68%) provide a solid foundation for future growth.

Investors and analysts will likely monitor how the bank manages the technical impact on its asset quality and its ability to maintain growth momentum in the evolving banking landscape.

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 strong 14% year-over-year (YoY) growth in operating profit, reaching ₹11,515.00 crore, despite a 4% YoY decline in net profit due to technical factors affecting asset quality.

Key Financial Highlights

Asset Quality and Provisions

The bank's asset quality metrics were impacted by what it termed as "Technical Impact," which affected the recognition of slippages and 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) was at 71%

The bank made provisions and contingencies of ₹3,948.00 crore for Q1 FY26, significantly higher than the ₹2,039.00 crore in Q1 FY25.

Business Growth

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

Digital Banking and Payments

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

• Continued to hold a market-leading position in UPI Payer PSP space with a market share of ~32%
• Ranked among the largest players in Merchant Acquiring business with a terminal market share of ~19.7%
• Acquired approximately 0.79 million new credit cards in Q1 FY26

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

The bank maintained a strong capital position:

• Overall Capital Adequacy Ratio (CAR) stood at 16.85%
• CET1 ratio improved to 14.68%, up 62 basis points YoY

While the bank's core operating performance remained strong, the impact of technical factors on asset quality metrics overshadowed the overall results. Axis Bank continues to focus on digital innovation and expanding its market share across various segments as it navigates the evolving banking landscape in India.

Consolidated Performance

On a consolidated basis, the Axis Bank Group reported:

The bank's subsidiaries continued to contribute positively to the group's performance, with steady growth observed across its various business verticals.

Investors and analysts will be closely watching how Axis Bank addresses the technical impact on its asset quality in the coming quarters while maintaining its growth trajectory in a competitive banking environment.