Axis Bank Q2 profit drops 25 pc as RBI-mandated provision bites; home loans dip marginally

Mumbai, Oct 15 (PTI) Axis Bank reported a 25.31 per cent decline in its consolidated net profit for the September quarter at Rs 5,528 crore, hit by a Rs 1,231-crore provision on crop loans mandated by RBI.

On a standalone basis, the third largest private sector lender had a net profit of Rs 5,090 crore, down from Rs 6,918 crore in the year-ago period.

Despite registering a 12 per cent loan growth, its core net interest income went up by just 2 per cent on-year to Rs 13,745 crore, impacted by narrowing in the net interest margin (NIM) to 3.73 per cent from 3.99 per cent in the year-ago period.

Chief financial officer Puneet Sharma told reporters that NIMs will bottom-out in the December quarter provided there is no further rate cut by the Reserve Bank.

The bank's other income de-grew by 1 per cent to Rs 6,625 crore, largely impacted by a 55 per cent dip in trading income at Rs 498 crore during the reporting quarter.

Its provisions went up sharply to Rs 3,547 crore from Rs 2,204 crore in the year-ago period, primarily due to the discontinued crop loan products.

"Following an RBI advisory, post its FY25 annual inspection, the Bank in Q2FY26 made an additional one-time standard asset provision of Rs 1,231 crores for two discontinued crop loan variants," the bank said in a statement.

Management exuded confidence that the money will be written back as the loans get repaid. No divergence in asset quality or non-performing asset provisioning was identified, the bank made it clear.

Gross slippages increased to Rs 5,696 crore from Rs 4,443 crore in the year-ago period. The bank continued to disclose a higher number because of 'technical impact' first disclosed in the June quarter, and pointed out that the number was higher by Rs 1,512 crore because of it.

The gross non-performing assets ratio stood at 1.46 per cent as against 1.57 per cent in the quarter-ago period.

A senior bank official said there has not been any impact on the portfolio because of the US tariff actions.

Advances growth was led by corporate segment and the bank management explained that it has been able to accelerate on the number as rationality has set in on pricing.

The retail advances grew by only 6 per cent, while the home loans were down by 1 per cent. A bank official said that home loans will start delivering growth going ahead.

A bank official said the retail asset quality is "stabilizing", and the quarter gone by witnessed an improvement on credit cards, prompting the bank to sell 10 lakh cards in the quarter, while it has stabilised in the personal loans segment.

The overall capital adequacy of the bank stood at 16.55 per cent with the core buffers at 14.43 per cent.

Among the subsidiaries, non-bank lender Axis Finance's net profit for the first half of FY26 increased to Rs 385 crore from Rs 327 crore.

Axis Bank's managing director and chief executive Amitabh Chaudhry said the entity is set to be classified as an upper-layer NBFC in due course, which will entail a listing as well.

Axis Asset Management Company's profit after tax for the first two quarters of FY26 went up to Rs 271 crore from Rs 244 crore, while the same for Axis Capital dropped to Rs 299 crore from Rs 405 crore.

The Axis Bank scrip closed 0.65 per cent down at Rs 1,169 apiece on the BSE on Wednesday, as against gains of 0.70 per cent on the benchmark. PTI AA HVA