Axis Bank Q2 Profit Surges 38% as Asset Quality Strengthens
Axis Bank reports a 38% surge in Q2 net profit driven by a 52% drop in provisions and improved asset quality.
Axis Bank has posted a stellar performance for the July-September quarter of FY27, reporting a 38 per cent year-on-year jump in its standalone net profit. The bank's bottom line reached Rs 7,003 crore, a growth trajectory primarily fueled by a significant reduction in provisions and a noticeable improvement in the quality of its assets.
The Provisioning Pivot
A key driver behind this profit spike was the sharp decline in provisions and contingencies, which plummeted by 52 per cent. These costs dropped to Rs 1,694 crore, compared to Rs 3,547 crore in the same quarter last year.
It is important to note that the previous year's figures were influenced by a one-time standard asset provision of Rs 1,231 crore, which contributed to the dramatic year-on-year decrease. While the core operating profit saw a more modest rise of 6 per cent, reaching Rs 11,083 crore, the reduced provisioning burden acted as a powerful catalyst for the overall net profit.
Cleaner Balance Sheets and Lower Risk
The bank's investor presentation highlights a positive trend in asset health, noting that Gross Non-Performing Assets (GNPA), Net Non-Performing Assets (NNPA), slippages, and credit costs all improved on both a year-on-year and quarter-on-quarter basis.
- Gross NPAs: Fell to 1.16 per cent from 1.46 per cent a year ago.
- Net NPAs: Improved to 0.35 per cent from 0.44 per cent.
- Loan Slippages: Fresh slippages decreased to Rs 4,762 crore from Rs 5,696 crore in the corresponding quarter last year.
- Credit Cost: The annualised net credit cost saw a decline of 28 basis points year-on-year, landing at 0.45 per cent.
Growth in Deposits and Lending
Axis Bank continues to expand its footprint in both deposits and advances. Total deposits grew by 21 per cent year-on-year and 6 per cent quarter-on-quarter, reaching a total of Rs 14.52 lakh crore. Similarly, advances grew by 23 per cent year-on-year and 9 per cent quarter-on-quarter, totaling Rs 13.74 lakh crore.
Corporate vs. Retail Growth
The bank observed a distinct difference in the pace of growth across its lending portfolios. Corporate lending emerged as the primary growth engine, surging by 34 per cent year-on-year. In contrast, retail loan growth remained steady but slower, increasing by 16 per cent over the same period.
Key Financial Metrics
In addition to the profit surge, the bank reported that its net interest income rose by 12 per cent to Rs 15,371 crore, while the net interest margin was recorded at 3.36 per cent.
The combined effect of lower provisioning requirements, expanding deposits, and a strategic push in corporate lending has positioned Axis Bank with a strengthened financial profile this quarter.