Axis Bank Q2 PAT fell 26% on higher operating costs, muted core revenue growth

The lender’s net interest income (NII) or core income grew 2 percent year-on-year to ₹13,745 crore | Photo credit:

Private sector major Axis Bank on Wednesday kicked off the Q2 2026 earnings season for the banking sector, reporting a 26 per cent year-on-year decline in net profit to ₹5,090 crore, due to one-time provisioning for standard assets, higher operating expenses (opex) and subdued core revenue growth.

The lender’s net interest income (NII), or core income, grew 2 per cent year-on-year to ₹13,745 crore. Other income fell 1 per cent to ₹6,625 crore. Operating expenses rose 5 percent year-on-year to ₹9,957 crore, largely due to higher purchase of priority sector loan certificates (PSLCs).

Further, the lender said that following an RBI advisory at the bank’s FY25 annual inspection, it had made an additional one-time standard asset provision of ₹1,231 crore for two discontinued crop loan variants. These were farmer loans and classified as priority sector advances. Axis Bank MD and CEO Amitabh Chaudhry said the lender does not expect the asset quality of these loans to deteriorate further and default provisions will be reversed by March 31, 2028 if the loans continue to perform. Axis Bank will continue to closely monitor the repayment trends for these loans, the MD said.

“The customer terms remain unchanged. This standard provision for assets will be written back to the profit and loss account when all outstanding loans in the two discontinued product variants have been recovered or closed in the normal manner or by March 31, 2028 (subject to any remaining outstanding loan accounts on that date being closed), whichever is earlier. The said annual inspection revealed no difference in asset quality or NPA provisions established,” the bank said.

Core activity

Axis Bank’s net advances rose 12 per cent YoY to ₹11.16 lakh crore, while deposits rose 11 per cent YoY to ₹12.03 lakh crore.Retail loans, which constituted 57 percent of the loan portfolio, grew 6 percent YoY, while corporate loans with a 31 percent share of total advances grew 20 percent YoY. The bank expects its lending to grow 300 basis points (bps) higher than the industry average in the current fiscal.

Asset quality remained stable, with the gross and net non-performing asset ratio (GNPA, NNPA) increasing by 2 basis points and 10 basis points year-on-year to 1.46 percent and 0.44 percent at the end of September. According to management, the bank has seen better collection trends on unsecured loans in the quarter under review.

Further, the lender said it is waiting for the regulator’s final guidelines on ‘corporate forms’ before calling for capital raising for its non-banking arm Axis Finance.

“At the same time, Axis Finance is growing quite well. It has its capital requirements and we as the owner of Axis Finance need to ensure that they get capital at the right time. So we will continue to evaluate our options… also, Axis Finance will very soon become a top tier NBFC given the size of their assets under management, which also means that we also need to be on the path to listing it at some point in the future put…”, said Chaudhry.

Published on October 15, 2025