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Axis Bank Ltd

| Q2 FY26 Media Conference Call

NEUTRAL SENTIMENT

Report Source

⬤15th Oct 25

Summary : Axis Bank reported strong Q2 FY26 growth in advances and deposits, stable asset quality, and robust digital performance, while addressing one-time provisions and regulatory advisories with confidence.

Management Perspective positive : With a resilient balance sheet, a sharp execution focus, and a clear strategic direction, we remain confident and optimistic about the opportunities that lie ahead. We will continue to invest where necessary to remain differentiated and distinctive in our journey towards building an 'all-weather institution'.

Concall Report Analysis & Insights

Business Overview

  1. Axis Bank delivered strong Q2 FY26 growth in advances (12% YOY) and deposits (11% YOY), gaining market share.
  2. Core operating profit increased 3% YOY, supported by stable net interest income and healthy fee income growth.
  3. Credit card business surpassed 15 million cards, and UPI market share reached over 35% in value and volume.
  4. The bank maintains a resilient balance sheet with a strong CET1 ratio of 14.43% and healthy provision coverage of 70%.
  5. Retail asset quality is stabilizing, with net slippages and credit costs lower than Q2 FY25.

Future Growth Prospects

  1. Management is confident and optimistic about future opportunities, aiming for profitable and sustainable growth.
  2. Expects margins to bottom out in Q3 if no further rate cuts occur, with potential reset if cuts happen.
  3. Anticipates capitalizing on new RBI guidelines for acquisition financing, leveraging existing strengths.
  4. Axis Finance is growing well and is expected to become an upper layer NBFC in the future.
  5. Continued investment in digital platforms and product innovation to drive competitive advantage.

Management Insights

  1. Focused on building a resilient all-weather franchise, creating multiplicative forces, and building for the future.
  2. Demonstrated controlled movement in cost of funds, with a 24 basis point QOQ decline in Q2.
  3. Retail asset quality is stabilizing, with improvements in cards and stabilization in personal loans.
  4. Addressed a one-time standard asset provision of Rs. 1,231 crores for discontinued crop loans, which is fully secured and will be written back.
  5. Expressed optimism about RBI policy changes being positive for the banking system and Axis Bank.

Signs of Skepticism

  1. RBI issued a letter of caution to Axis Bank citing lapses in KYC norms related to an old account from 2010-11.
  2. The one-time standard asset provision of Rs. 1,231 crores, while explained as static and recoverable, had a significant impact on ROA/ROE.
  3. Management's confidence in retail asset quality stabilization is based on current trends, but full turnaround timing is not specified.
  4. The impact of new RBI guidelines on acquisition financing and Axis Finance's NBFC status is still awaiting clarity.

Risk Factors

  1. Tariff-related developments presented headwinds, with impact on sectors like textiles and pharma being monitored.
  2. Potential for margin pressure if the RBI implements further rate cuts.
  3. Regulatory scrutiny on compliance, as evidenced by a recent RBI advisory regarding KYC norms for an old account.
  4. One-time standard asset provision of Rs. 1,231 crores for discontinued crop loan variants impacted ROA/ROE.

Good To Know

  1. Launched industry-first solutions: 'Lock FD' and India's first gold-backed credit line on UPI.
  2. Received FICCI CSR Award and SKOCH Award 2025 for digital-first approach in bounce collection.
  3. Migrated approximately 95% of eligible corporate clients to the Neo platform.
  4. Domestic subsidiaries delivered steady performance, with Axis Finance PAT up 18% YOY.
  5. The bank's mobile app is highly rated (4.7-4.8) with 15 million active monthly users.

Key Drivers

  1. Strong deposit and advance growth.
  2. Stabilizing retail asset quality trends.
  3. Digital innovation and market share.
  4. Positive impact of RBI policy.

Key Analyst Discussions

Competitive Environment

  1. How Axis Bank plans to compete with established foreign lenders in the domestic acquisition financing space.
  2. Management highlighted Axis Bank's leading position in rupee financing and syndication.
  3. Foreign banks have a much smaller share in the domestic rupee financing market.

Market Trends & Consumer Behavior

  1. Inquiries about the impact of rate cuts, GST reductions, and improving liquidity on credit growth.
  2. Questions regarding observed credit demand during the festive season.
  3. Discussion on the impact of tariffs on corporate and small loan portfolios across various sectors.

Financial Highlights

  1. Clarification on the Rs. 1,231 crore one-time standard asset provision for discontinued crop loans.
  2. Explanation of net slippages and net credit cost trends, noting improvement from previous quarters.
  3. Discussion on factors contributing to stable Net Interest Margins (NIMs) despite rate cuts.
  4. Reason for the QOQ increase in other operating expenses, primarily due to Priority Sector Lending Certificates (PSLC) cost.

Product Composition

  1. Reasons for degrowth in home loans, attributed to runoffs exceeding disbursals in past quarters.
  2. Confirmation that home loan disbursals are picking up, with growth expected to return.
  3. Details on the nature of the two discontinued crop loan variants (farmer lending) that led to the provision.

Strategic Considerations

  1. Impact of recent RBI regulatory reforms on acquisition financing and potential market share gains.
  2. Status and timeline for a potential stake sale or capital raising for Axis Finance.
  3. Discussion on Axis Finance's trajectory towards becoming an upper layer NBFC.
  4. Steps being taken to strengthen the compliance framework following a recent RBI advisory on KYC lapses.
Axis Bank Ltd (AXISBANK) Concall Report Analysis & Insights | Dhanarthi