Net interest margin (NIM) was flat quarter-on-quarter (Q-o-Q) at 3.6 per cent. Net interest income (NII) grew 4.7 per cent Y-o-Y and 1.2 per cent Q-o-Q to ₹14,460 crore. Overall loan growth stood at 19 per cent Y-o-Y, while deposit growth improved to 14 per cent Y-o-Y. Management focus is on loan growth. The current account and savings account (CASA) ratio was up by 48 bps Q-o-Q to 40 per cent. The credit/deposit ratio inched up to 92.3 per cent, up 41 bps Q-o-Q.
Gross non-performing loans (NPL) ratio declined 15 bps Q-o-Q to 1.2 per cent, while the net NPL ratio declined 5 bps Q-o-Q to 0.4 per cent. Gross slippage ratio stood at 1.5 per cent annualised, better than the prior three quarters. Credit cost is elevated on account of a one-off standard asset provision, but net credit costs dropped by 39 bps Q-o-Q to 37 bps.
There was 6 per cent Q-o-Q growth in both advances and deposits, and NIM guidance is at 3.8 per cent, with a 20 bps improvement expected over 15–18 months. The cost-to-assets improved 5 bps Q-o-Q to 2.28 per cent.
The provision coverage ratio (PCR) is steady at 70 per cent. Gross slippages stood at ₹4,700 crore, down from ₹6,000 crore in Q3FY26, with the gross slippage ratio down 48 bps Q-o-Q to 1.63 per cent. Net slippages fell 41 bps Q-o-Q to 0.70 per cent. Technical slippages are negligible, and separate disclosure will be discontinued from Q1FY27.
Reported profit after tax (PAT) of ₹7,070 crore is flat Y-o-Y. The bank has taken a ₹2,000 crore one-time standard asset provision to pre-fund any impact from West Asia. This is offset by a ₹2,190 crore tax credit arising from the conclusion of Citi intangibles assessment. The ₹15,500-plus crore provisioning buffer, alongside a CET1 of 14.38 per cent, offers substantial cover for macro risk. The return on assets (RoA) is at 1.58 per cent and return on equity (RoE) at 14.74 per cent. There were ₹410 crore of employee-related one-offs. Importantly, the ₹2,000 crore provision is precautionary, not linked to fresh asset stress.
Retail disbursements accelerated 24 per cent Y-o-Y, while deposit costs declined 46 bps Y-o-Y. Retail growth saw home loans up 28 per cent Y-o-Y, vehicle loans up 25 per cent Y-o-Y, and agri up 34 per cent Y-o-Y. The bank is focused on a 70:30 retail-wholesale mix to optimise RoE.
The NIM for Q4FY26 at 3.6 per cent is down 35 bps Y-o-Y, reflecting full transmission of the Dec’25 repo cut — Axis’ loan book is 61 per cent repo-linked. The cost of deposits reduced 4 bps Q-o-Q to 4.73 per cent, and the management reiterated NIM guidance of 3.8 per cent.
The bank gained 20 bps of system loan market share over FY26. Advances rose 19 per cent Y-o-Y, driven by corporate, up 10 per cent Q-o-Q and 38 per cent Y-o-Y, and SME (small and medium enterprises) up 6 per cent Q-o-Q and 24 per cent Y-o-Y. The combined SBB+SME+MC book stands at 24 per cent of total loans, and 91 per cent of the corporate book is rated A- or better. SBB stands for small business banking (SBB) and MC for mid-corporate (MC).
Axis Bank’s pre-provision operating profit (PPOP) in Q4FY26 missed estimates, as core fee income growth remained soft at 3.5 per cent Y-o-Y and operating expenditure rose 8.6 per cent Q-o-Q. The repo-linked book (61 per cent) has largely repriced, limiting future yield downside.
The stock has high valuations that may adequately reflect the improving growth, likelihood of improving NIM, strong provision buffers, lower credit costs, and reducing net slippages. Management is confident of outpacing industry growth and reiterated its 18 per cent RoE target. There is no immediate need for equity capital, with flexibility to raise AT1 or Tier-2 if required.
West Asia remains a key monitorable despite enhanced provisions. If that resolves, asset quality normalisation, NIM improvement, and growth could be well set to meet or even exceed guidance. Subsidiaries make a significant contribution to valuation.
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