Axis Bank shares slump 7% as Q1 misses estimates; asset quality, provisions weigh on performance

Axis Bank shares dropped over 7% in early trade today after the private lender reported a disappointing performance for the June quarter. A sharp rise in provisions and deterioration in asset quality weighed on investor sentiment. In the overnight trade, U.K.-listed shares of private lender Axis Bank Ltd., also known as Global Depository Receipts (GDR), fell nearly 5% as investors reacted negatively to the lender's quarterly results.

Weighed down by Q1 performance, Axis Bank plunged as much as 7.4% in early trade on Friday, hitting a low of ₹1,073.95 on the BSE. However, the stock recovered some ground and was trading 4% lower at ₹1,114 at the time of reporting. The banking heavyweight's market capitalisation stood at ₹3.45 lakh crore.

Axis Bank on Thursday reported a 3.8% year-on-year (YoY) decline in net profit at ₹5,806.14 crore for the June quarter of FY26, compared to ₹6,034.64 crore in the same period last year. On a sequential basis, net profit of the country's third largest private sector lender dropped 18%.

The operating profit rose 14% YoY to ₹11,515 crore, while core operating profit grew 5% YoY to ₹10,095 crore, as per the bank.

During the quarter under review, net interest income (NII) grew marginally by 0.8% to ₹13,560 crore, compared to ₹13,448 crore in the year-ago period. However, on a sequential basis, NII declined by 2%.

The net Interest Margin (NIM) stood at 3.80% for Q1 FY26, down from 3.97% in the previous quarter and 4.05% in the same quarter last year.

Axis Bank witnessed deterioration in asset quality during the June quarter, as the gross non-performing asset (NPA) ratio climbed to 1.57% as of June 30, 2025, from 1.28% at the end of March 2025, and 1.54% a year earlier. The net NPA ratio also rose to 0.45%, compared to 0.33% in the previous quarter and 0.34% in the corresponding quarter of the previous year.

In absolute terms, gross NPAs increased to ₹17,765 crore in Q1FY26, up from ₹14,490 crore in Q4FY25 and ₹16,211 crore in Q1FY25. Net NPAs stood at ₹5,066 crore, compared to ₹3,685 crore in the previous quarter and ₹3,553 crore a year ago.

The bank reported provisions at ₹3,948 crore in the June quarter of the fiscal year 2026, against ₹1,359 crore in the March quarter and ₹2,039 crore in the year ago period, partially impacted by technical adjustments. Of the total provisions, ₹821 crore was attributable to this Technical Impact. Adjusting for it, provisions and contingencies for the quarter stood at ₹3,127 crore.

Axis Bank’s balance sheet grew 9% year-on-year, reaching ₹16,03,308 crore as of June 30, 2025. The CASA ratio (current and savings account deposits as a share of total deposits) stood at 40% at the end of Q1FY26. The bank’s advances rose 8% YoY and 2% QoQ, reaching ₹10,59,724 crore as of June 30, 2025. Retail loans increased 6% YoY to ₹6,22,960 crore, comprising 59% of the bank’s total net advances. Of these, approximately 72% were secured retail loans.

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