Mumbai’s Axis Bank faced a huge decline in earnings on October 15, 2025. The bank’s standalone net profit declined 26% year-on-year to Rs 5,090 crore in the September quarter (Q2FY26), down from Rs 6,918 crore last year. The decline, which is higher than the expected 10-15% decline, was mainly due to a one-time provision of Rs 1,231 crore for two discontinued crop loan schemes, as advised by the Reserve Bank of India (RBI) to strengthen standard asset buffers.

In a filing to the stock exchanges, the private lender clarified that once these loans are fully repaid or repaid by March 31, 2028, this buffer will go back to the profit-loss account, thereby mitigating the long-term impact. Barring this loss, core profitability remained stable, with net interest income (NII), the lifeline of loan operations, growing 2% year-on-year and 1% quarter-on-quarter (QoQ) to Rs 13,744 crore, driven by strong credit expansion. Net revenue grew 13% YoY to Rs 15,202 crore, although operating expenses rose 16% due to employee costs and technology investments.

Asset quality, which is a bright spot, remained stable amid this turmoil. Gross non-performing assets (NPA) ratio declined to 1.46% from 1.57% in Q1FY26, while gross NPAs declined to Rs 17,308 crore from Rs 17,764 crore. Net NPA remained stable at 0.44% (Rs 5,114 crore), supported by 70% provision coverage ratio (PCR), slightly lower from 71% quarter-on-quarter. Gross slippage declined to Rs 5,696 crore from Rs 8,200 crore in Q1, but remained above Rs 4,443 crore year-on-year; Recovery/upgradation stood at Rs 2,887 crore, offsetting write-offs of Rs 3,265 crore. RBI’s annual audit did not indicate any asset quality or provision deviations.

Balance sheet data underlined the resilience: advances grew 11.7% year-on-year to Rs 11.16 lakh crore, while deposits grew 10.7% to Rs 12.03 lakh crore, maintaining a healthy loan-deposit ratio of 92.8%. Capital adequacy ratio (CAR) remained strong at 16.6%, while return on assets (RoA) stood at 1.7%.

Shares fell 0.4% to Rs 1,172.50 ahead of the results, but have gained 6% in the past month on merger synergy and a pick-up in retail lending. Analysts remain optimistic and consider the provisioning to be temporary amid the surge in festive lending. “Axis Bank’s underlying position remains intact; improvement likely in Q3,” said Bhavik Dave, analyst at Emkay Global. As peers like HDFC Bank have pointed out, Axis Bank’s focus on unsecured lending and digital banking will test its continued recovery following the interest rate cut.