Axis Bank Q2 net profit rises 38% to ₹7,003 crore as provisions fall

Axis Bank, the third largest private sector lender, reported a 38 per cent Year-on-Year (YoY) rise in net profit to ₹7,003 crore for the second quarter of 2026-27 (Q2FY27), supported by healthy growth in net interest income (NII) and decline in provisions. 

The lender’s NII – the difference between interest earned and expended - grew 12 per cent YoY to ₹15,371 crore during the quarter. Net interest margin (NIM) stood at 3.36 per cent, compared with 3.73 per cent in the year-ago quarter. Excluding the impact of foreign currency non-resident (FCNR-B) deposits, NIM stood at 3.47 per cent.

The bank reported FCNR-B deposits of ₹1.018 trillion, including deposits backed by advances from its international branches and standby letters of credit. The management of the bank said that it will use the funds to retire bulk deposits or use it drive growth in advances.

“FCNR (B) deployment is a combination of either we substitute high cost deposits which come up for renewal or we use it to continue to drive advances growth. So, we will continue to be adaptive to the environment in terms of how we use this. In this quarter itself, we used some of our FCNR (B) to retire or substitute the high cost deposits. There are multiple levers, both on cost of funds as well as on the asset mix side,” said Subrat Mohanty, Executive Director, Axis Bank during the media call.

Other income slipped 1 per cent YoY to ₹6,531 crore, as trading income fell sharply to ₹85 crore from ₹498 crore a year earlier. Fee income, which forms a substantial component of other income, rose 6 per cent to ₹6,381 crore.

Responding to a question on the impact of the insurance regulator’s proposed overhaul distribution reforms on the lender's fee income, Mohanty said that it is still a consultation paper and there are multiple levers of having alternate sources of fee income.

“We think we will have some amount of time when the final regulatory provisions might apply. Between now and then, there are multiple levers in terms of having alternative sources of fee and also mitigating the possible impact of these provisions - in terms of getting better volumes, changing product mix, and also making right kind of discussions with our insurance partners to increase the pie. Because, the customer will get the benefit of lower prices. We will pursue a combination of all these measures. However, it is still at an early stage,” he said.

Provisions and contingencies of the bank dropped 52 per cent YoY to ₹1,694 crore in the quarter. Annualised credit cost declined to 0.45 per cent, from the year-ago level, as asset-quality indicators improved.

The gross non-performing asset (GNPA) ratio declined to 1.16 per cent as of September 30, 2026, from 1.28 per cent a quarter earlier. The net NPA ratio fell to 0.35 per cent from 0.39 per cent.

Gross slippages declined to ₹4,762 crore during Q2FY27, compared with ₹5,696 crore in the year-ago quarter and ₹5,566 crore in the preceding quarter. Recoveries and upgrades from NPAs stood at ₹2,380 crore, while the bank wrote off NPAs worth ₹2,729 crore during the quarter. Its provision coverage ratio, excluding prudential write-offs, remained at 70 per cent.

The advances of the bank grew 23 per cent YoY and 9 per cent sequentially to ₹13.74 trillion as of September 30, 2026. Retail loans rose 16 per cent to ₹7.4 trillion, accounting for 54 per cent of net advances. Small and medium enterprise (SME) loans increased 25 per cent to ₹1.65 trillion, while corporate advances grew 34 per cent to ₹4.69 trillion.

Deposits increased 21 per cent YoY to ₹14.52 trillion at the end of September. Term deposits rose 27 per cent YoY on a month-end basis, while current and savings account (CASA) deposits grew 7 per cent and 12 per cent, respectively. The CASA ratio stood at 36 per cent at the end of the quarter, compared with 40 per cent a year earlier. The management said that they have not revised rates on retail term deposit rates yet.

The bank’s capital adequacy ratio stood at 16.27 per cent at the end of September, while its common equity tier-1 (CET-1) ratio was 14.61 per cent. 

The board of directors has also appointed former Whole-Time Member (WTM) of Securities & Exchange Board of India (Sebi) Ananth Narayan as additional independent director of the bank effective from October 19, 2026. It has also appointed Rahul Shukla as Group Head, Commercial and Bharat Banking.