Why Did Axis Bank's Q2 Net Profit Decline by 25% to Rs 5,557.5 Crore?
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Synopsis
In a notable financial update, Axis Bank Limited has reported a 25% decrease in net profit for the second quarter of FY26. This decline, primarily due to a significant provision for discontinued loan variants, raises questions about the bank's future performance amidst improving asset quality metrics.
Key Takeaways
- Net profit fell by 25% YoY to Rs 5,557.5 crore.
- Provision of Rs 1,231 crore for discontinued loans impacted earnings.
- Gross NPA ratio improved to 1.46%.
- Advances grew by 11.7% to Rs 11.16 lakh crore.
- Deposits increased by 10.7% to Rs 12.03 lakh crore.
Mumbai, Oct 15 (NationPress) The private banking institution Axis Bank Limited disclosed a 25% year-on-year (YoY) reduction in its net profit, amounting to Rs 5,557.5 crore for the quarter concluding September 2025 (Q2 FY26). This downturn is primarily attributed to a one-time provision of Rs 1,231 crore accounted for two phased-out crop loan variants, following an advisory from the Reserve Bank of India (RBI), as indicated in its stock exchange report.
The lender, based in Mumbai, revealed that this provision, established as a standard asset buffer, will be reversed to the profit and loss account once all loans associated with the discontinued schemes are settled or closed by March 31, 2028.
This action exerted pressure on the bank’s earnings for the quarter. Net Interest Income (NII), which represents the bank's core revenue from lending, increased by 1.9% YoY to Rs 13,744 crore, according to the lender's filing.
Notwithstanding the profit impact, asset quality showed consistency. The bank’s gross non-performing assets (NPA) ratio improved to 1.46% from 1.57% in the June quarter, while the net NPA remained nearly unchanged at 0.44%, compared to 0.45% in the previous quarter.
In terms of absolute figures, gross NPAs decreased to Rs 17,308 crore from Rs 17,764 crore in June, with net NPAs at Rs 5,114 crore.
The bank also confirmed that no discrepancies in asset quality or provisioning were identified during the RBI’s annual examination.
Fresh gross slippages, or new NPAs, totaled Rs 5,696 crore during the quarter, lower than Rs 8,200 crore in the June quarter but higher than Rs 4,443 crore in the same timeframe last year.
Recoveries and upgrades reached Rs 2,887 crore, while the bank wrote off bad loans amounting to Rs 3,265 crore.
Advances at Axis Bank grew by 11.7% YoY to Rs 11.16 lakh crore, and deposits increased by 10.7% to Rs 12.03 lakh crore from Rs 10.86 lakh crore in the same quarter last year.
On Wednesday, shares of Axis Bank closed down by 0.4% at Rs 1,172.5 ahead of the results, although the stock has appreciated by approximately 6% over the past month.
Point of View
It is crucial to recognize that while Axis Bank faces challenges reflected in its quarterly profit decline, the underlying stability in asset quality provides a balanced perspective. The bank's proactive measures indicate a commitment to sound financial management, ensuring that it remains a strong player in the banking sector.
NationPress
15/10/2025
Frequently Asked Questions
What caused the decline in Axis Bank's net profit?
The 25% drop in Axis Bank's net profit was primarily due to a one-time provision of Rs 1,231 crore for two discontinued crop loan variants, following RBI's advisory.
What is the current NPA ratio for Axis Bank?
As of the latest quarter, Axis Bank's gross non-performing assets (NPA) ratio improved to 1.46% from 1.57% in the previous quarter.
How much did Axis Bank's advances grow?
Axis Bank's advances grew by 11.7% year-on-year, reaching Rs 11.16 lakh crore.
What was the performance of Axis Bank's shares recently?
On the day of the report, Axis Bank's shares closed 0.4% lower at Rs 1,172.5, but they have gained around 6% over the past month.
What is the outlook for Axis Bank's asset quality?
The bank's asset quality remains stable, with no divergences reported during the RBI's annual inspection.
