India’s third-largest private sector lender Axis Bank kicked off the weekend earnings deluge with a strong set of numbers. On Saturday, October 17, the bank reported a standalone net profit of ₹7,003 crore for the July-September quarter of FY27, up nearly 38% from ₹5,089 crore a year ago. The beat was powered by a sharp 52% drop in provisions and steadily improving asset quality, even as the bank’s foreign currency deposit surge continued to squeeze its margins.
The profit did, however, slip 2% from the June quarter, and it fell short of what the Street was pencilling in.
Analysts polled ahead of the announcement had expected a net profit of around ₹7,260 crore. But on most operating lines, Axis Bank delivered better than feared.
The core numbers came in strong
Net interest income, the money a bank makes from the gap between what it pays depositors and earns from borrowers, rose 12% year-on-year to ₹15,371 crore. That was comfortably ahead of the ₹14,920 crore analysts had estimated. Operating profit grew 6% to ₹11,083 crore, while core operating profit climbed 11% to ₹10,998 crore.
Fee income, a steady earner for the bank, advanced 6% to ₹6,381 crore. Total income for the quarter rose over 14% to ₹42,949 crore. Provisions and contingencies fell to ₹1,694 crore, less than half the ₹3,547 crore set aside in the same quarter last year. Axis Bank’s investor presentation noted that the year-ago quarter had carried a one-time standard asset provision of ₹1,231 crore, which flattered this quarter’s comparison somewhat.
Asset quality keeps getting better
For a banking sector that has been through years of bad-loan cleanups, Axis Bank’s asset quality slide was the standout of this quarter:
- Gross NPAs fell to 1.16% of total loans, down from 1.28% in June and 1.46% a year ago, beating the 1.3% estimate.
- Net NPAs declined to 0.35% from 0.39% last quarter and 0.44% a year earlier.
- Fresh slippages dropped to ₹4,762 crore from ₹5,696 crore in the year-ago quarter.
- Net credit cost fell to 0.45%, down 28 basis points year-on-year.
- Provision coverage ratio held steady at 70%.
The bank’s presentation summed it up in one line: GNPA, NNPA, slippages and credit costs all improved, both year-on-year and quarter-on-quarter.
The FCNR deposit overhang
Every strong result has its caveat, and for Axis Bank it is the flood of foreign currency non-resident deposits. The bank mobilised $10.62 billion in FCNR(B) deposits under the RBI’s special window as of September 30, among the highest in the industry. These inflows helped fund lending and replace pricier bulk deposits, but they also weighed on margins.
Net interest margin stood at 3.36% for the quarter, down from 3.46% in June. Stripping out the FCNR effect, NIM would have been 3.47%. The bank pegged the FCNR-related drag at roughly 11 basis points. Management said the dollar deposits are being used mainly to replace higher-cost bulk borrowings and to support loan growth, but margin pressure is likely to linger for a couple of quarters as the book normalises.
What management said
Managing director and CEO Amitabh Chaudhry said the bank continues to focus on digital payments, secure banking, AI-driven innovation and strategic partnerships to strengthen its customer offerings. The bank declined to give a formal loan growth guidance, citing a high base and inflationary pressures, but said its lending pipeline and on-ground activity point to robust demand.
Total deposits grew 20.6% year-on-year to ₹14.52 lakh crore, while advances rose 23% to ₹13.73 lakh crore. Operating expenses rose 9% from a year ago to ₹10,819 crore, with the bank attributing the jump to business volumes, technology investments and digital journeys.
The stock and the road ahead
Axis Bank shares closed at ₹1,286.45 on the BSE on Friday, nearly flat for the day but up about 4% over the past month. With a market capitalisation of nearly ₹4 lakh crore, the stock is likely to be in focus when markets reopen on Monday, October 19, as investors weigh the profit beat against the margin squeeze.
Frequently asked questions
Q: What was Axis Bank’s Q2 FY27 net profit?
A: The bank reported a standalone net profit of ₹7,003 crore for the July-September 2026 quarter, up 37.6% from ₹5,089 crore a year earlier.
Q: Why did Axis Bank’s profit rise so much this quarter?
A: Provisions fell 52% year-on-year to ₹1,694 crore, while net interest income grew 12% and asset quality improved across every major metric.
Q: What dragged on the bank’s margins?
A: The $10.62 billion in FCNR(B) deposit inflows under the RBI’s special window shaved about 11 basis points off net interest margin, which stood at 3.36%.
Q: What is the outlook for Axis Bank shares?
A: The stock closed at ₹1,286.45 on Friday and will react to the results when markets open on Monday, October 19. The profit beat was strong, though margins remain under watch.
Disclaimer: This article is for informational purposes only and should not be considered investment advice. Consult a financial advisor before making investment decisions.
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