Axis Bank Q3 profit rises by 4 percent to reach Rs 7,010.65 crore, driven by strong small business lending and higher core income, even as retail loan growth slowed and margins came under pressure.
Axis Bank Ltd., India’s third-largest private-sector lender, posted a net profit of Rs 7,010.65 crore for the October–December quarter, up from Rs 6,742.99 crore a year earlier, according to a regulatory filing. On a standalone basis, profit rose to Rs 6,489.57 crore from Rs 6,303.77 crore in the same period last year.
The lender’s core net interest income increased 5 percent to Rs 14,287 crore, supported by overall loan growth of 14 percent. That expansion, however, was partly offset by a compression of 0.29 percentage points in net interest margin, which fell to 3.64 percent during the quarter.
Small Business Loans Drive Overall Credit Expansion
Axis Bank Q3 profit rises alongside a deliberate recalibration of the loan book, which saw retail loans grow 6 percent year-on-year. While retail expansion slowed, lending to small businesses surged 22 percent, acting as the primary engine for overall credit growth during the period.
Chief Executive and Managing Director Amitabh Chaudhry said the bank remains focused on outperforming system-wide credit growth while maintaining balance-sheet discipline. “Our ambition remains unchanged, and we continue to pursue sustainable growth rather than short-term acceleration,” Chaudhry told analysts.
Management said the moderation in retail loan growth was temporary. Retail disbursements rose more than 20 percent during the quarter, indicating strong underlying demand. If that trend continues, the bank expects retail loan growth to pick up over the next three quarters.
Margins Compress as Rate Cut Looms, Management Signals Caution
Axis Bank warned that net interest margins could face further pressure following the Reserve Bank of India’s rate cut in December. Chief Financial Officer Puneet Sharma said margins in coming quarters are likely to contract more than they did in the third quarter.
“The impact of the rate cut will flow through gradually, and we expect some additional margin compression,” Sharma told reporters. He added that the bank is relying on volume growth, cost discipline and improved productivity to protect profitability.
Other income rose to Rs 6,226 crore from Rs 5,972 crore a year earlier, providing some cushion against margin pressure. Operating expenses remained under control, aided by earlier investments in technology that improved employee productivity and utilization, Sharma said.
Asset Quality Stabilizes Despite Higher Slippages
Axis Bank Q3 profit rises alongside a notable stabilization in asset quality, even as new slippages reached Rs 6,003 crore this quarter. While this figure is higher than the Rs 5,432 crore reported a year ago, the bank clarified that Rs 1,698 crore of these slippages stemmed from technical factors—the third consecutive quarter this trend has appeared.
Despite the higher slippages, the gross non-performing assets ratio improved to 1.40 percent from 1.46 percent in the preceding quarter. Total provisions rose to Rs 2,245.92 crore from Rs 2,155.63 crore a year earlier.
Sharma said asset quality has largely stabilized and that other indicators, including credit costs, are showing improvement. “What matters more to us is the trend in credit costs, where we are seeing a positive movement,” he said.
The bank’s capital adequacy ratio stood at 16.55 percent as of Dec. 31, 2025, remaining comfortably above regulatory requirements.
Axis Bank said it set aside Rs 25 crore during the quarter toward the implementation of new labor codes, significantly lower than some peers, as it has been provisioning for employee social security obligations since 2020.
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