Axis Bank Q4 results: Net profit flat, beats estimate; provisions surge, asset quality improves

Even though higher provisions and lower non-interest income hurt profitability, Axis Bank's March quarter (Q4 FY26) earnings were released on Saturday. Net profit came in marginally above Street estimates. 

In contrast to the CNBC-TV18 poll prediction of Rs 6,989 crore, the private sector lender reported a net profit of Rs 7,071 crore for the quarter. But from Rs 7,117 crore, profit fell 0.6% year over year. Sequentially, it increased by 9%. A crucial indicator of the bank's fundamental profits, net interest income (NII), increased 5% year over year to Rs 14,457 crore.

"While we enter the new financial year with confidence and optimism, focusing on building a more resilient franchise, we are conscious of the global macro and geopolitical situation shaping up and are closely watching it," Amitabh Chaudhry, managing director and chief executive officer said.

Axis Bank's provisions and contingencies rose sharply to Rs 3,522 crore during the fiscal fourth quarter, compared with Rs 2,245 crore in the previous quarter, and Rs 1,359 crore a year ago.

The bank said it created an additional one-time provision of Rs 2,001 crore to strengthen its balance sheet amid “evolving and unpredictable macroeconomic and geopolitical uncertainties”. It added that the move was precautionary and does not reflect any deterioration in asset quality.

Asset quality metrics improved sequentially, with gross non-performing assets (GNPA) ratio declining to 1.23 percent from 1.40 percent in the previous quarter. Net NPA ratio eased to 0.37 percent from 0.42 percent.

Axis Bank's net credit cost stood at 0.37 percent for the quarter, declining both sequentially and year-on-year. The lender's provision coverage ratio remained healthy at 70 percent.

Core operating revenue remained broadly stable, while fee income grew 8 percent quarter-on-quarter and 4 percent year-on-year to Rs 6,561 crore, supported by retail fee growth and granular fee mix. However, overall non-interest income was impacted by a trading loss of Rs 606 crore during the quarter.

Operating profit declined 7 percent year-on-year to Rs 10,013 crore, while operating expenses rose 6 percent on-year.

Advances grew 19 percent year-on-year and 6 percent sequentially to Rs 12.34 lakh crore, led by strong growth in corporate and SME segments. Deposits rose 14 percent on-year, with CASA ratio at 40 percent.

The bank maintained a strong capital position, with capital adequacy ratio at 16.42 percent and CET-1 ratio at 14.38 percent.