Axis Bank’s Performance Analyzed

Axis Bank, one of India’s biggest private banks, recently saw its stock price drop. This happened after a report from a foreign investment firm raised concerns about how quickly the bank could improve its profits. The drop highlights some challenges the bank is facing, but also shows signs of a potential turnaround.

Key Points

• Bank’s profit recovery is delayed, impacting margin expectations significantly.
• Margins are projected to improve slowly, reaching 3.8% over 18 months.
• Fee income remains limited due to current business and market conditions.
• Credit card stress easing, but loan portfolios largely stable currently.
• Seasonal increase in loan slippages expected; impact is manageable.
• Corporate recovery gaining momentum, retail recovery watched carefully.

The report said the bank’s leaders now believe that it will take longer than they originally thought for profits to grow. They expect the difference between what the bank earns and what it pays out (called the ‘net interest margin’) to reach its lowest point in the fourth quarter of this year or early next year. This is later than the bank had predicted before.

The experts believe the improvement in profits will be gradual, like a “C” shape, meaning it will go down slowly and then slowly come back up. They think the ‘net interest margin’ – the difference between what the bank earns and what it pays out – will eventually reach 3.8% over about 18 months.

Another issue is that the bank isn’t making as much money from fees – charges for services – as they hoped. This is because of the type of loans they are giving out and the overall economic situation. The investment firm still recommends holding onto the stock, but thinks it will eventually reach a price of Rs 1,285.

Despite these challenges, things are getting better in some areas. The problems with loans that are going bad (called ‘stress’) in the bank’s credit card division are decreasing. The personal loan business is also becoming more stable, and there are no new worries about small businesses that export goods.

However, the bank expects a temporary increase in ‘gross slippages’ – loans that are turning into bad debts – during the third quarter. This is mainly because of loans given out to farmers and businesses that have short-term loans. But the experts think the impact won’t be as bad as it was during a previous difficult period.

Good news is that companies are starting to borrow more money from the bank. Businesses are using their money better, and they’re refinancing – taking out new loans to replace old ones. The retail business – loans given to regular people – is showing some signs of improvement, but the bank is keeping a close eye on it to make sure it’s sustainable.

As of September 30, 2025, Axis Bank has 5,976 branches and 13,177 ATMs across India. In the last quarter (Q2 FY26), the bank’s profits fell by 26.42% compared to the previous quarter, but its total income increased by 1.22%. The bank’s net interest income (the money it makes from loans) was Rs 13,745 crore, and its net interest margin was 3.73%.

Ultimately, Axis Bank’s journey reflects the broader economic challenges and opportunities facing Indian banks.