Axis Bank , one of India's leading private sector banks, saw its stock price plummet 5.3% to ₹1,098.70 following the implementation of tighter asset classification and income recognition standards. The new norms, which have significantly impacted the bank's quarterly profitability, prevent account upgrades until full settlement is completed, a departure from previous rules that allowed upgrades after partial payments.

Impact on Financial Performance

The stricter standards have had a substantial effect on Axis Bank's financial metrics:

• Profit after tax reduced by ₹614.00 crore
• Return on Assets (ROA) declined by 15 basis points
• Return on Equity (ROE) dropped by 1.4 percentage points

Increase in Gross Slippages

The bank reported a sharp rise in gross slippages, which increased by over 70% to ₹8,200.00 crore. The breakdown of these slippages is as follows:

Market Reaction and Analyst Outlook

The news of Axis Bank's profit decline had a ripple effect on the broader market:

• Axis Bank's stock closed 5.3% lower at ₹1,098.70
• The Bank Nifty index experienced a 1% decline

Nuvama, a financial services firm, responded to the news by:

• Downgrading Axis Bank stock to 'Hold'
• Reducing the target price to ₹1,204.00 from ₹1,410.00

Analysts have expressed concerns about:

• Emerging asset quality issues
• Lack of aggressive growth guidance
• Potential margin compression
• Higher credit costs

Management Changes

In light of these developments, Axis Bank has announced several key management changes:

1. Neeraj Gambhir has been appointed as a Whole-time Director, designated as "Executive Director" for a period of 3 years, subject to regulatory and shareholder approvals.

2. Arjun Chowdhry, Group Executive for Affluent Banking, Cards, Payments and Retail Lending, has resigned to pursue entrepreneurial endeavors, effective August 31, 2025.

3. Anoop Manohar and Arnika Dixit have been categorized as Senior Management Personnel, effective August 4, 2025, and September 1, 2025, respectively.

Conclusion

As Axis Bank adapts to these new regulatory standards, investors and analysts will be closely monitoring the bank's performance in the coming quarters. The focus will be on assessing its ability to manage asset quality and maintain growth in a more stringent operating environment.

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.