Axis Bank Q2 net falls 26% to ₹5,090 crore on one-time provision

Despite a profit decline due to standard asset provisions, Axis Bank's asset quality improved and loan growth remained steady in Q2FY26

Axis Bank, India’s third-largest private sector lender, reported a 26 per cent year-on-year (Y-o-Y) decline in net profit to ₹5,090 crore for the second quarter (July-September) of 2025-26 (Q2FY26) primarily due to a one-time standard asset provision of ₹1,231 crore. The provisioning was done for two discontinued crop loan variants, as advised by the Reserve Bank of India (RBI).  Sequentially, the bank’s net profit fell 11 per cent. 

The bank said this standard asset provision will be written back to the profit and loss account once all outstanding loans under the two discontinued products are recovered or closed, either in the normal course or by March 31, 2028. 

“No divergence in asset quality or non-performing asset (NPA) provisioning was identified in the said annual inspection,” the bank added. Net interest income (NII) grew 2 per cent Y-o-Y to ₹13,745 crore despite healthy loan growth during the quarter, as other income declined 1 per cent Y-o-Y. The bank’s net interest margin (NIM) moderated to 3.73 per cent, compared to 3.80 per cent in the previous quarter. NIM is a measure of profitability of banks. 

Fresh slippages stood at ₹5,696 crore in Q2FY26, up 28 per cent Y-o-Y, though down 30 per cent sequentially. The one-time standard asset provision also pushed up total provisions and contingencies to ₹3,547 crore, up 61 per cent Y-o-Y but down 10 per cent sequentially. 

Asset quality improved during the quarter, with gross NPAs at 1.46 per cent, down 11 basis points (bps) from the previous quarter while net NPAs fell to 0.44 per cent. 

The bank’s advances rose 12 per cent Y-o-Y, and 5 per cent sequentially to ₹11.16 trillion in Q2FY26. Retail loans grew 6 per cent Y-o-Y, and 2 per cent sequentially, accounting for 57 per cent of total advances. 

Additionally, small business banking (SBB) loans grew 14 per cent Y-o-Y, and 5 per cent sequentially; loans against property rose 22 per cent Y-o-Y; personal loans 4 per cent; credit card advances 7 per cent; and the rural loan portfolio jumped 2 per cent. 

The small and medium enterprise (SME) book expanded 9 per cent sequentially and 19 per cent Y-o-Y to ₹1.32 trillion. The corporate loan book grew 20 per cent Y-o-Y, with the domestic corporate book rising 25 per cent, and the mid-corporate segment up 28 per cent Y-o-Y and 8 per cent sequentially. 

“We delivered better growth outcomes in the second quarter, driven by wholesale banking, where we prioritised clients and segments which could drive deeper relationship economics. In retail banking, we have started seeing gradual uptake both into secured and unsecured segments while maintaining focus on sourcing better quality customers”, said Amitabh Chaudhry, MD and  CEO, Axis Bank. 

Total deposits grew 4 per cent sequentially and 11 per cent Y-o-Y on a month-end basis to ₹12.03 trillion. Within this, current account deposits rose 13 per cent Y-o-Y, savings account deposits grew 4 per cent sequentially and 6 per cent Y-o-Y, and term deposits increased 4 per cent sequentially and 12 per cent Y-o-Y. The share of CASA (current account savings account) deposits in total deposits stood at 40 per cent.