Axis Bank Expects Credit Growth To Outpace Industry By 300 Basis Points In FY27

India's third-largest private lender by assets, expects its credit growth to run about 300 basis points faster than the industry average in the current financial year, driven by strong demand from both corporate and retail borrowers, its chief executive said.

Amitabh Chaudhry, managing director and chief executive of Axis Bank, told Reuters that demand was coming from sectors such as data centres and small businesses, along with retail customers looking to borrow against gold.

Sector-Wide Credit Growth Picks Up Pace

Credit growth in India's $3.36 trillion banking sector rose to 18.3% year-on-year in June 2026, up sharply from 9.3% a year earlier. This was the fastest pace in over four years, even as deposit growth continued to trail behind, keeping the loan-to-deposit ratio close to decade-high levels, a Bernstein report said.

According to the report, credit growth stayed strong in July as well, with the recovery visible across sectors but led mainly by industrial and services lending. Large corporate borrowings and rising funding needs at non-banking financial companies were among the key drivers behind the trend.

Bernstein noted that changes to fortnightly reporting requirements introduced in December 2025 had contributed to part of the reported rise. Based on bank disclosures, the brokerage estimated the underlying credit growth at around 18%.

Industrial credit growth was helped by a sharp increase in borrowing by large companies, which account for nearly 70% of industrial loans, while credit to micro, small and medium enterprises also remained strong. Services lending gained momentum as well, with bank credit to NBFCs growing by more than 30% in recent months. Bernstein attributed this partly to higher bond-market rates, which pushed NBFCs to depend more on bank loans for funding.

"The recent improvement in system credit growth has been broad-based across segments, although the sharpest acceleration has been visible in industrial and services lending," the report said.

Earnings Boost And Funding Concerns

The pickup in credit is expected to support earnings at Axis Bank, which reported a standalone net profit of ₹7,114 crore for the quarter ended June, up from ₹5,806 crore a year earlier. Net interest income during the period rose 8% to ₹14,646 crore, helped by a 19% increase in domestic loans, Reuters reported. Chaudhry also said a central bank facility allowing banks to draw subsidised dollar deposits was likely to further support credit growth across the sector.

The report flagged that loan growth had outpaced deposit mobilisation, raising concerns about funding availability for banks. While deposit growth has picked up in recent months, it remains below the pace of credit growth, keeping the system-wide loan-to-deposit ratio near decade-high levels.

Despite this, Bernstein said bank margins had stayed broadly stable, as fresh lending and term-deposit rates largely held steady, while lower certificate of deposit rates eased some funding cost pressure. "The spread between fresh loan yields and TD rates remains higher than the spread embedded in the outstanding loan and deposit portfolios, indicating that incremental loan growth remains margin-accretive," the report said.

The brokerage also pointed to healthy asset quality and improving credit costs, which have kept banking-sector profitability near decade-high levels. Bernstein expects the sector to maintain healthy growth in FY27, supported by favourable liquidity conditions, though it cautioned that possible policy tightening later in the year could slow the pace of expansion. The brokerage retained its FY27 loan-growth estimate at 13-15% and expects net interest margins to stay broadly stable, with asset quality remaining benign.