Axis Bank Q3 results: Net profit rises 3% to ₹6,490 cr, NII at ₹14,287 cr

Axis Bank, India’s third largest private sector lender, on Monday reported a 3 per cent year-on-year (Y-o-Y) increase in net profit at ₹6,490 crore during the October-December quarter (Q3FY26).

 

It was owing to muted growth in net interest income (NII), other income, and marginal increase in loan loss provisions.

 

NII was up 5 per cent Y-o-Y in Q3 to ₹14,287 crore, despite its net advances growing robustly at 14 per cent during the quarter.

 

Other income was up 4 per cent to ₹6,226 crore during the quarter, due to significant fall in trading income.

 

The bank’s domestic net interest margin (NIM) was down 9 basis points (bps) in Q3 at 3.64 per cent over Q2.

 

 

It reported fresh slippages of ₹6,007 crore in Q3, up 5.6 per cent from the previous quarter, and 10.6 per cent from the same period last year. Slippages primarily were from the retail portfolio at ₹5,472 crore.

 

The bank also disclosed that gross slippages on account of technical impact in Q3 were ₹1,698 crore, and net slippages on account of technical impact stood at ₹449 crore.

 

The bank said gross slippages for Q3 adjusted for technical impact is ₹4,308 crore, and net slippages for the quarter adjusted for technical impact was ₹2,685 crore.

 

The bank’s loan loss provisions for Q3 were ₹2,307 crore, compared to ₹2,133 crore in Q2, and ₹2,185 crore in Q3FY25.

 

 Provisions on account of technical impact in Q3FY26 were ₹377 crore.

 

Asset quality of the lender improved in the quarter, with gross non-performing assets (NPAs) at 1.4 per cent, down 6 per cent over previous quarter.

 

Net NPAs stood at 0.42 per cent. Gross NPA ratio adjusted for technical impact stands at 1.21 per cent. Net NPA ratio adjusted for technical impact was 0.33 per cent.

 

The bank’s net advances portfolio grew 14 per cent Y-o-Y to ₹11.59 trillion, driven by growth in corporate portfolio at 27 per cent, followed by SME portfolio at 22 per cent growth.

 

Retail portfolio of the bank grew modestly at 6 per cent.

 

“In retail banking, we remain selective in scaling segments, with a sharp focus on credit-tested customers and growth across our distribution channels,” said Amitabh Chaudhry, managing director (MD) & chief executive officer (CEO), Axis Bank.

 

“…we found opportunities to grow wholesale and SME in the current environment and we have been cautious about growing the retail portfolio. This is given the stress in the retail book that we've seen in the second half of last financial year,” said Puneet Sharma, chief financial officer (CFO).

 

Commenting on the growth in the wholesale book, Subrat Mohanty, executive director, said, “…we are seeing good positive momentum in real estate, power and some of the large conglomerates that we have a relationship with. We are getting more than our natural market share, more than our usual wallet share because of the relationship that we have built over the last three years.”

 

Deposits, on the other hand, grew 15 per cent to ₹12.6 trillion, with term deposits growing 16 per cent to ₹7.67 trillion.

 

Current account deposits of the bank grew 20 per cent to ₹1.72 trillion, while savings account deposits went up 11 per cent to ₹3.21 trillion.

 

“There are four areas of focus as we navigate the current cycle. Deposit growth, credit growth, retail asset quality, and cost, where we continue to work on sustainable outcomes. We continue to compound on the foundation built for wholesale in the first half (H1FY26), with deeper ecosystem penetration and increasing customer stickiness,” said Chaudhry.

 

He added that growth is anchored around high-quality transaction-led ecosystems and flows, while holding the stance on quality intact. “This is evident from the quality of our incremental sanctions, as growth remains concentrated in A- and above-rated clients,” he said.

 

“On asset quality, our secure portfolios across segments continue to remain resilient, while the early indicators on retail unsecured products are well within stabilising levels,” he added.

‘Stake sale in Axis Finance not off the table’

 

Axis Bank on Monday said it is exploring all options for infusing capital into its wholly-owned non-banking subsidiary — Axis Finance — including stake sale to strategic investors.

 

“We will continue to make sure that capital is not a constraint for the business. We continue to explore all options of infusing capital into that business. The process is on right now based on some of the regulatory guidance as well as some of the changes in guidelines that have happened,” said Subrat Mohanty, executive director, Axis Finance.

 

“We are exploring stake-sale as one of the options. That particular exercise or that particular option is not off the table,” he added.

 

The Reserve Bank of India (RBI) had previously mandated that the bank cannot infuse additional equity into its subsidiary. So, the bank was in the process of exploring a stake sale to strategic investors and had appointed Morgan Stanley as a banker.

 

However, uncertainty over RBI’s Forms of Business circular — which had proposed barring any overlap between the businesses of banks and their group entities — had created an overhang among investors looking to invest in Axis Finance. 

 

RBI has now removed this clause from the final guidelines, which has also opened up the possibility of Axis Bank infusing equity capital into the subsidiary again.

 

“While the new circular potentially allows us to infuse capital again, this would require us to approach the RBI and seek its approval. This option needs to be examined, and it is uncertain how much time the process would take. It is because it would involve shifting from our earlier stance of not infusing capital to seeking permission. We have been engaging with potential investors who have invested time and effort in this process. We need to be mindful of that,” Amitabh Chaudhry, managing director (MD) & chief executive officer (CEO), Axis Bank, had said in an interview with Business Standard last month.