Axis Bank , India's third-largest private sector lender, has reported steady growth in its second quarter results, while warning of potential margin pressure in Q3 and announcing plans to sell its stake in Axis Finance.

Credit Growth and RBI Policy Impact

Axis Bank's CEO stated that recent RBI policies are expected to boost credit growth for the bank. This optimistic outlook comes as the bank has already shown robust loan growth, with advances increasing by 12% year-over-year to ₹11,16,703.00 crores as of September 30.

In response to RBI advice, the bank has added more funds for two crop loan variants, demonstrating its commitment to agricultural lending. This move aligns with the bank's focus on rural and semi-urban markets, where it reported a 2% year-on-year growth in rural advances.

Asset Quality and RBI Inspection

During a recent RBI inspection, no issues were found in the bank's asset quality, reflecting the bank's prudent risk management practices. The bank's Gross Non-Performing Assets (GNPA) ratio stood at 1.46% as of September 30, marginally up from 1.44% a year ago, while the Net NPA ratio improved to 0.44% from 0.34% in the same period.

Key Financial Highlights

• Net Interest Income (NII) grew by 2% year-on-year to ₹13,745.00 crores
• Fee income increased by 10% year-on-year to ₹6,037.00 crores
• Operating profit stood at ₹10,413.00 crores, down 3% year-on-year
• Net profit decreased by 26% year-on-year to ₹5,090.00 crores

Deposit and Advances Growth

The bank reported strong growth in both deposits and advances:

Digital Banking and Customer Base

Axis Bank continues to strengthen its digital banking capabilities:

• Mobile banking transaction volumes grew by 22% year-on-year
• 97% of financial transactions by individual customers were digital in Q2
• The bank's customer base expanded to approximately 54 million

Capital Adequacy and Liquidity

The bank maintains a strong capital position with a Capital Adequacy Ratio (CAR) of 16.55% and a CET1 ratio of 14.43% as of September 30. The bank also holds excess SLR of ₹101,012.00 crores, ensuring ample liquidity.

Q3 Outlook and Axis Finance Stake Sale

Axis Bank officials have indicated that bank margins may reach their lowest point in Q3 without additional rate cuts. This warning suggests potential pressure on the bank's profitability in the coming quarter.

In a strategic move, the bank is working on selling its stake in Axis Finance. An executive stated that Axis Finance will transition into a top-tier NBFC and must go public. This decision aligns with the bank's efforts to streamline its operations and focus on core banking activities.

The bank expects minimal impact from the shift to Expected Credit Loss (ECL) provisioning, demonstrating confidence in its risk management practices.

Impact of U.S. Tariffs

An Axis Bank executive stated that U.S. tariffs have had little effect on the bank's portfolio or asset quality. However, the executive noted that the full impact of these tariffs is still pending and remains to be seen.

Amitabh Chaudhry, MD & CEO of Axis Bank, commented on the results: "This quarter, we continued to push ourselves as an institution to deliver meaningful progress. From enhancing digital safety to expanding access to credit and empowering entrepreneurs, our innovations are designed to serve real needs with precision and scale."

As Axis Bank navigates the evolving financial landscape, its focus on digital innovation, rural expansion, and adherence to regulatory guidelines positions it well for sustainable growth in the coming quarters, despite potential short-term margin pressures and ongoing global economic uncertainties.

Axis Bank , one of India's leading private sector banks, reported mixed financial results, with a 4% year-on-year increase in core operating profit for H1, reaching ₹20,010.00 crores. However, the bank also experienced a 26% year-on-year decline in net profit for the second quarter, primarily due to a one-time provision.

Key Financial Highlights

• Core operating profit for H1 stood at ₹20,010.00 crores, up 4% year-on-year
• Net profit for Q2 declined to ₹5,090.00 crore, down from ₹6,918.00 crore in the same quarter last year
• Net Interest Income (NII) grew 2% year-on-year to ₹13,745.00 crore
• Fee income rose 10% year-on-year to ₹6,037.00 crore
• Advances increased by 12% year-on-year to ₹11,16,703.00 crore
• Total deposits grew 11% year-on-year

One-Time Provision Impact

The significant drop in Q2 profit was largely attributed to a one-time standard asset provision of ₹1,231.00 crore made for two discontinued crop loan variants. This provision was made following an advisory from the Reserve Bank of India (RBI) post its annual inspection.

Asset Quality and Provisions

The bank's asset quality remained relatively stable:

Business Growth and Operational Performance

Axis Bank showed robust growth in its core business areas:

• Corporate loan book grew 20% year-on-year
• Retail loans increased by 6% year-on-year
• SME loans expanded by 19% year-on-year

The bank's digital initiatives continued to gain traction:

• Acquired over 1 million new credit cards in the quarter
• Achieved a milestone of crossing 15 million cards in force
• Maintained a leading position in UPI Payer PSP space with a market share of approximately 37% by volume

Retail Banking and Credit Card Performance

Axis Bank's CEO reported a gradual rise in the retail banking book across both secured and unsecured segments during the second quarter. The bank also observed stabilization in stress levels for credit cards and unsecured loans, indicating improved risk management in these areas.

Capital Adequacy and Liquidity

Axis Bank maintained a strong capital position:

• Capital Adequacy Ratio (CAR) stood at 16.55%
• CET1 ratio improved to 14.43%, up 31 basis points year-on-year
• Average Liquidity Coverage Ratio (LCR) during the quarter was approximately 119%

Management Commentary

Amitabh Chaudhry, MD & CEO of Axis Bank, commented on the results: "This quarter, we continued to push ourselves as an institution to deliver meaningful progress. From enhancing digital safety to expanding access to credit and empowering entrepreneurs, our innovations are designed to serve real needs with precision and scale."

Outlook

Despite the one-time provision impacting the quarterly profit, Axis Bank's core performance indicators remain strong. The bank's focus on digital innovation, expanding its retail and corporate loan book, and maintaining asset quality positions it well for future growth in a competitive banking landscape.

The 4% growth in core operating profit for H1, along with steady growth in deposits and SME loans, demonstrates the bank's resilience. The gradual rise in the retail banking book and stabilization of stress levels in credit cards and unsecured loans further underscore the bank's improving performance in key segments.