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Axis Bank reported mixed performance in Q1FY27, with strong business growth partly offset by continued margin compression

ICICIdirect Research 20 Jul 2026 DISCLAIMER

News: Axis Bank reported mixed performance in Q1FY27, with strong business growth partly offset by continued margin compression. Advances grew 19% YoY (2% QoQ), led by robust corporate (38% YoY) and SME (25% YoY) growth, while retail growth remained relatively moderate despite healthy disbursement. Deposits increased 18% YoY (3% QoQ), driven by 23% YoY growth in term deposits, with CASA at 38%. NIM declined 16 bps QoQ to 3.46%, impacted by loan repricing, adverse balance-sheet mix and seasonal agri-related interest reversals. Treasury income moderated on a high base, while fee income remained healthy. Operating expenses stayed under control, while lower provisions led to credit cost moderating to ~63 bps. Seasonal agri stress led to higher net slippages (~1.12%), resulting in a marginal uptick in GNPA/NNPA to 1.28%/0.39%, with PCR remaining healthy at ~70%. PAT stood at ₹7,114 crore.

View: We expect NIMs to have largely bottomed out, with a gradual recovery likely over the coming quarters, aided by an improving loan mix towards higher-yielding retail assets, continued liability repricing and transmission of lower funding cost. Seasonal agri stress led to a marginal uptick in slippages, while asset quality remains comfortable with healthy provisioning buffers and benign credit cost.

Impact: Neutral

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