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Axis Bank reported mixed performance in Q4FY25 with improved asset quality but slower business growth.

ICICIdirect Research 28 Apr 2025 DISCLAIMER

Axis Bank reported mixed performance in Q4FY25 with improved asset quality but slower business growth.

Advances growth remained slower than industry at 8% YoY to ₹10,40,811 crores, though sequential rebound was witnessed (3% QoQ) which was driven by retail loans at 7% YoY (3% QoQ), SME at 14% YoY (4% QoQ). Deposit accretion remained strong at 10% YoY (7% QoQ) to ₹11,72,952 crores, led by term deposits up 14% YoY (5% QoQ). Focus on improving granularity and quality of deposit have enabled limiting increase in cost of funds.

Operationally, margins improved 4 bps QoQ to 3.97%, owing to focus on better yielding segments. Fee income growth remained healthy at 12% YoY with continued control on opex (up 6% YoY).

Asset quality improved with slippages declining to 1.85% in Q4FY25 vs 2.1% in Q3FY25. GNPA and NNPA ratio dipping 18 bps and 2 bps QoQ to 1.28% and 0.33%. Credit cost trend declined at ~50 bps, owing to reversal of ₹800 crore from security receipts. Management indicated stabilizing of stress in credit card segment, while personal loans is expected to take a few quarters to show improvement which was a change in earlier stance.

Deposit growth showed strong sequential traction, though loan growth remained below industry levels—sustainability of this momentum in Q1FY26 remains key. Margin impact from the recent rate cut is expected to be minimal, aided by a tightly matched asset-liability duration, though quarterly volatility could not be ruled out. Steep discount compared to private peers makes the lender a compelling opportunity.

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