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Informist, Saturday, Apr. 25, 2026

By Aaryan Khanna and Suryash Kumar

NEW DELHI/MUMBAI – Axis Bank's INR-20.01-billion provision made in the March quarter is tied to a specific pool of loans and is not a floating provision, the bank's management said in its post-earnings conference call with analysts Saturday. The risk team of the private-sector lender had identified the pool based on several parameters and the loans are all currently standard assets.

In the most adverse scenario, the provision accounts for crude oil prices averaging $150 a barrel for 12 months, though any more-than-normal deterioriation in the assets regardless of oil prices will trigger the provision, Chief Financial Officer Puneet Sharma said. The provision was created specifically in response to the conflict in West Asia starting end-February, which has driven up oil prices globally and is seen having an adverse impact on India's growth. However, the additional INR-20-billion buffer dragged Axis Bank's net profit marginally lower on year to INR 70.71 billion in the March quarter. 

"In an environment marked by uncertainty and volatility, our conservatism is a strategic advantage," Managing Director and Chief Executive Officer Amitabh Chaudhry said on the call. 

Despite the geopolitical concerns, Axis Bank's loan growth outpaced peers with net advances growing 18.5% on year to INR 12.34 trillion as of Mar. 31, against 16.1% for the industry. Of this, the corporate loan book surged 38% on year to INR 4.13 trillion. That pace of growth was achieved without diluting underwriting standards and the bank's risk-adjusted return on capital had not fallen over the year, the management said. Around 91% of the corporate loan book is rated 'A-' or higher, both on existing loans and fresh disbursals. The growth in corporate loans also led to greater opportunity on earning fee income in allied services, they said. 

The growth in interest-earning assets was marginally slower than loans and yields on these assets fell 5 basis points on quarter, Sharma said. In the near term, the bank's strategy was optimising its net interest income with growth in wholesale loans but it would calibrate back to higher-yielding retail loans. At the same time, the robust loan growth that picked up during the March quarter had been continuing into April and has not impinged on profitability, as counted in the risk-adjusted return on the bank's capital, he said.

"So your pointed question on was the growth period-end or will we see the growth sustain and have net interest income from that growth? The book has continued to hold up," Sharma said. "So it was not a period end bump up for growth that we reported on the advances side."

Though retail loans grew only 8% on year, retail disbursements were 24% on year and 19% sequentially, the bank said in its investor presentation, without disclosing a number. Even on the retail side, the bank had not diluted its quality requirements for lending and its strategy remained in growing without loosening its risk filters in its disbursements, the executives said. The bank's investment in digitising its products is likely to lead to further retail disbursements and loan growth at the pace seen in the last two to three quarters, according to the management. In the March quarter, 68% of its personal loan disbursements were end-to-end in the digital channel, the bank said. 

As part of its strategy, Axis Bank was not organically compliant on its priority sector lending target in financial year 2025-26 (Apr-Mar) and had bought priority sector lending certificates to make up the difference, the management said. These loans to sectors designated a priority by the government--such as agriculture or micro enterprises--are high-yielding but higher risk than other segments of credit.

The return to a higher rate growth in its retail loans, still the largest part of the portfolio at INR 6.73 trillion on Mar. 31, will also help the bank's return on equity, the chief financial officer said. In response to a question, he said Axis Bank's aspirational RoE was 18% and not 15%. The bank reported an annualised return on equity of 14.74% in the March quarter and 13.15% in FY26 as a whole. The wholesale segment's return is lower, while loans to both retail participants and small and medium enterprises give an RoE above the aspirational rate, he said.

The bank reiterated its guidance for the retail and small and medium-enterprise segment to drive 70% of its growth and corporate loans to drive the remaining 30%. It also held on to its guidance of delivering a net interest margin of 3.80% through the cycle, which it counted as 15-18 months from the transmission of rate cuts on its entire loan portfolio, Sharma said. The Reserve Bank of India's Monetary Policy Committee last cut the repo rate by 25 basis points in December, which had transmitted to the bulk of Axis Bank's portfolio, the management said. The MPC is not expected to further cut the repo rate but may take a decision based on the impact of the West Asia conflict on the Indian economy.

"We have not shifted away from our stance that we expect to deliver 3.8% NIM (net interest margin) through the cycle. We are working towards this," CEO Chaudhry said. "...obviously it's a target that is not easy to pin down because the interest rates continue to behave in a manner and a shape which is difficult to predict. Given all that, we are optimising everything."

The bank also does not see a case for further cuts on retail deposit rates across the industry after the 10-15 basis-point reduction after the last repo rate cut, Executive Director Neeraj Gambhir said. While the tranmission to depositors is not complete, the competitive state of the market is unlikely to allow for a further fall, he said. Bulk deposit rates had fallen in April from the seasonal rise in the March quarter, especially as liquidity conditions had eased, but the trajectory on these will be dependent on the movement in crude oil prices and the currency and the market's reaction to these, the executive said. 

The call came after Axis Bank reported its earnings for the quarter and year ended March earlier on Saturday. On Friday, the bank's shares ended 0.3% lower at INR 1,365.90 on the National Stock Exchange.  End

Edited by Akul Nishant Akhoury

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