Abhishek Sinha
Axis Bank, India’s fourth-largest private lender, reported a 26% year-on-year (YoY) drop in net profit to ₹5,090 crore for the quarter ended September 2025 (Q2FY26), compared to ₹6,918 crore in the same period last year. The decline was primarily due to a ₹1,231 crore one-time provision related to discontinued crop loan products, following a regulatory advisory from the Reserve Bank of India (RBI).
Sequentially, the bank’s profit also dipped 12.3% from ₹5,806 crore recorded in the June quarter.
Provision Impact and Management Note
Axis Bank stated in its exchange filing that the standard asset provision will be reversed once all outstanding loans under the discontinued products are recovered or closed, or by March 31, 2028, whichever occurs earlier.
The additional provisioning significantly weighed on the bank’s profitability during the quarter.
NII and Margins Beat Estimates
Despite the profit drop, the bank reported a 2% YoY rise in net interest income (NII) at ₹13,745 crore, exceeding analysts’ expectations of a marginal decline.
The net interest margin (NIM) also came in higher than anticipated at 3.5%, reflecting stable lending profitability.
Asset Quality Holds Steady
Axis Bank’s asset quality remained stable sequentially. As of September 30, 2025, the Gross NPA (non-performing assets) ratio stood at 1.46%, and Net NPA at 0.44%, compared with 1.57% and 0.45%, respectively, in the previous quarter.
On a YoY basis, however, asset quality showed mild slippage — Gross NPAs were 1.44% and Net NPAs 0.34% in the same period last year.
The bank’s provision coverage ratio (PCR) stood at 70%, slightly lower than 71% in June 2025 and 77% a year ago.
Slippages and Outlook
Gross slippages during the quarter were reported at ₹5,696 crore, down from ₹8,200 crore in Q1FY26 but higher than ₹4,443 crore in Q2FY25.
Analysts say the strong NII performance and steady NIM indicate resilience in the bank’s core operations, even as provisioning and legacy exposures continue to pressure near-term earnings.
Summary
| Key Metrics | Q2FY26 | Q2FY25 | YoY Change |
|---|---|---|---|
| Net Profit | ₹5,090 crore | ₹6,918 crore | ▼ 26% |
| Net Interest Income (NII) | ₹13,745 crore | ₹13,470 crore | ▲ 2% |
| NIM | 3.5% | 3.4% | ▲ |
| Gross NPA | 1.46% | 1.44% | — |
| Net NPA | 0.44% | 0.34% | — |
| PCR | 70% | 77% | ▼ |
Analyst Take
Market experts expect Axis Bank’s profitability to normalize in coming quarters as the one-off provisioning cycle fades. The lender’s consistent focus on asset quality, digital growth, and retail expansion is likely to support sustainable earnings recovery in FY26.
