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Axis Bank (Target Price - ₹1,520, BUY) - “Normalization in earnings with no one-offs in Q3”

ICICIdirect Research 30 Jan 2026 DISCLAIMER

Axis Bank reported healthy business momentum though margin pressure persisted in Q3FY26. Advances grew 14% YoY (4% QoQ), led by continued traction in SME and mid-corporate segments, while retail portfolio remained benign in single digit. Deposits recorded robust growth of 15% YoY (5% QoQ), led by healthy CASA inflows, with CASA ratio sustained at 39%.
NIM declined 9 bps QoQ to 3.64% in Q3FY26, weighed down by an unfavourable shift toward lower-yielding corporate loans, relatively tighter LDR and rate cut transmission. Management maintained its through-cycle NIM guidance of ~3.8%, noting that near-term pressure from rate transmission and mix effects should ease as deposit repricing continues, retail mix normalises, and balance-sheet optimisation levers play out over the cycle.
Asset quality trends remained benign, with GNPA/NNPA improving to 1.4%/0.42% down 6bps /2 bps respectively. Excluding technical impact, gross slippages improved to 1.51% (vs 1.55% in Q2FY26) with net credit cost stable at 0.63%. Further, RoA improved to 1.49% (vs 1.23% Q2FY26), due to normalisation of provisions (down 37% QoQ).
With corporate-led growth sustaining balance-sheet momentum, retail disbursements gaining traction, and asset quality stabilising alongside easing credit cost, earnings visibility is improving. Any inorganic expansion remains watchful. Basis this, we remain positive on the stock.

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