Axis Bank Q4 Profit Dips Marginally as Provisions Surge, Asset Quality Improves

Axis Bank, India's third-largest private sector lender, reported a marginal year-on-year (YoY) decline in net profit to ₹7,071 crore for the quarter ending March 2026, weighed down by higher provisions and a trading loss that dented other income. On a sequential basis, however, net profit grew 9%.

Net interest income (NII) rose 5% year-on-year to ₹14,457 crore. The bank's net interest margin (NIM), which measures a bank's profitability, declined marginally by 2 basis points sequentially to 3.73%, with the overall NIM at 3.62%.

Provisions and contingencies rose sharply to ₹3,522 crore in Q4 FY26, compared with ₹2,245 crore in the previous quarter and ₹1,359 crore a year ago. This included an additional precautionary provision of ₹2,001 crore, which the bank attributed to evolving macroeconomic and geopolitical uncertainties.

"This action is prudent and precautionary in nature and does not reflect any deterioration in asset quality or adverse credit trends in the bank's loan or investment portfolio as of the reporting date. Our core asset quality metrics remain stable and within our risk guardrails," the bank said in a statement.

Operating profit declined 7% YoY to ₹10,013 crore, while operating expenses rose 6% on-year. Non-interest income was also impacted by a trading loss of ₹606 crore during the quarter, though fee income grew 8% quarter-on-quarter (QoQ) and 4% YoY to ₹6,561 crore, supported by retail fee growth.

Asset Quality, Balance Sheet Remain Healthy

Despite the earnings pressure, asset quality improved sequentially. Gross non-performing assets (GNPA) declined to 1.23% from 1.40% in the previous quarter, while net NPA fell to 0.37% from 0.42%.

The bank's balance sheet grew 17% YoY to ₹18.86 trillion as of March 31, 2026. Total deposits rose 14% YoY to ₹13.35 trillion, with CASA deposits growing 11% and term deposits up 16%. Advances grew 19% YoY to ₹12.33 trillion, driven by 38% growth in the corporate book and 24% in the SME segment. Net credit cost stood at 0.37%, declining both sequentially and year-on-year, while the provision coverage ratio remained healthy at 70%.

The board recommended a dividend of ₹1 per equity share for FY26, subject to shareholder approval, and also approved raising ₹35,000 crore through debt instruments and ₹20,000 crore through equity.