Axis Bank Q1 Results: Net Profit Drops 4% To Rs 5,806 Cr, Asset Quality Impacted; Muted Growth In NII

For the quarter that ended on June 30, 2025 (Q1FY26), Axis Bank recorded a net profit of Rs 5,806 crore on Thursday, July 17. This is a 4% year-on-year drop from Rs 6,035 crore in Q1FY25. The impact of technical slippages, which resulted in higher provisions and contingencies throughout the quarter, was the main cause of this decline in profitability.

The bank's operating profit increased 14% YoY to Rs 11,515 crore in spite of the net profit decline, helped by robust growth in non-interest income and efficient management of costs. The high provisioning caused the Return on Equity (ROE) to be 13.14% and the Return on Assets (ROA) to be 1.47%, both of which were somewhat lower than they were during the same period in the previous year.

In Q1FY26, Axis Bank recorded Net Interest Income (NII) of Rs 13,560 crore, representing a modest 1% year-on-year growth over Q1FY25's Rs 13,448 crore. Narrowing net interest margins (NIM), which were 3.80% in Q1FY26 compared to 3.97% in the prior quarter, were the main cause of the 2% sequential fall in NII. The bank maintained consistent momentum in its loan book, with overall advances expanding 8% YoY and 2% QoQ, despite the subdued rise in NII.

The asset quality of Axis Bank had a slight deterioration in Q1FY26, mostly due to technical factors. The net non-performing asset (NPA) ratio climbed from 0.33% to 0.45%, while the gross non-performing asset ratio jumped from 1.28% to 1.57%.
The Gross and Net NPA rates, however, were more constant at 1.41% and 0.36%, respectively, after accounting for technical effects, which were mostly associated with cash credit and overdraft slippages.

Technical impact contributed Rs 2,709 crore to the bank's reported gross slippages of Rs 8,200 crore, which was much higher than the Rs 4,805 crore in Q4FY25. Although recoveries and upgrades were also strong at Rs 2,147 crore, the retail category alone accounted for Rs 5,210 crore of the quarter's net slippages of Rs 5,149 crore.

Amitabh Chaudhry, MD&CEO, Axis Bank said, "We are optimistic as we step into FY26. With supportive regulatory conditions, the operative landscape is turning favourable. We believe large, well-capitalised banks like Axis with strong digital capabilities, innovative product suites are best suited to seize the opportunity. At Axis, we have built a robust Digital Bank along with an extensive branch network that ensures smart, seamless banking experience for millions of customers. We believe we have built a platform that allows us to grow at rates faster than the industry this year and this thesis will continue to play in the medium term."

"Technical Impact has adversely impacted PAT by 614 crores, ROA adversely by 15 bps and ROE adversely by 1.4%. 80% of individual contracts that slipped because of Technical Impact and that continue to remain NPA as at June 30, 2025 are fully secured. Hence, given the aforementioned security cover, we believe that economic loss due to Technical Impact will be minimal over the life of such contracts," Axis Bank said in a statement on Thursday.

As of June 30, 2025, the bank's balance sheet was at Rs 16,03,308 crores, a 9% year-on-year growth. On a month-on-month basis, the total deposits jumped by 9%, with 9% growth in current account deposits, 3% growth in savings account deposits, and 12% growth in term deposits. At the end of Q1FY26, CASA deposits accounted for 40% of total deposits. Total deposits increased by 8% YoY on a QAB basis, with savings account deposits expanding by 1%, current account deposits by 4%, and term deposits by 12%.

In comparison to 5,427 domestic branches and extension counters and 182 Business Correspondent Banking Outlets (BCBOs) spread across 2,987 centers as of June 30, 2024, Axis Bank's total distribution network as of June 30, 2025, consists of 5,879 domestic branches and extension counters and 235 BCBOs spread across 3,192 centers. The bank operated 14,134 ATMs and cash recyclers nationwide as of June 30, 2025. As of June 30, 2025, the bank's Axis Virtual Center had eight centers and more than 1,825 virtual relationship managers.