Axis Bank Q2 profit jumps 38% to Rs 7,003 crore as provisions halve

Axis Bank's net profit rose about 38% from a year earlier to Rs 7,003 crore in the July to September 2026 quarter, the bank reported on Saturday, 17 October 2026, as provisions for bad loans halved. The result was slightly below analysts' expectations of about Rs 7,132 crore. Net interest income, the bank's core lending income, rose about 11.8% to Rs 15,371 crore, beating estimates of about Rs 14,970 crore. The net interest margin was 3.36%, or 3.47% excluding foreign-currency non-resident (FCNR-B) deposits. Asset quality improved, with the gross non-performing assets ratio at 1.16% and the net NPA ratio at 0.35%.

Axis Bank is one of India's largest private sector banks, and its results add to the picture of how the banking system fared in the September quarter. The headline profit growth looks strong, but most of it came from a sharp fall in provisions, the money banks set aside for loans that may go bad. A year ago the bank had set aside much more; this year it needed about half as much. Operating profit, which strips out provisions, grew a far more modest 6%.

That is why the result was received as slightly below expectations even with a 38% profit jump. Investors look closely at core earnings, and here the picture was mixed: net interest income beat forecasts, but the margin remains under pressure. The bank's margin figure excluding FCNR-B deposits shows that, like other lenders, it raised costly foreign-currency deposits from non-resident Indians under an RBI swap facility, and these weighed on the headline margin.

The improvement in asset quality is the most reassuring part. A gross NPA ratio of 1.16% is low, and falling bad loans mean less money needs to be set aside, which supports profits. The question for the next two quarters is whether the RBI's rate increase in October, which raises borrowing costs, leads to more stress among borrowers.

Set against its peers on the same day, Axis Bank's profit growth was far higher than HDFC Bank's 4.7%, held back by lower treasury gains, and ICICI Bank's 20%, but the drivers were different: Axis benefited most from lower provisions, while ICICI's growth came from faster lending.

Short-term: Axis Bank's shares will react when markets open, with investors weighing the profit jump against the slight miss and modest operating growth.

Long-term: Lower bad loans give the bank room to grow, but margins and core profit growth will need to improve for earnings to keep rising once the boost from lower provisions fades.

Who is affected: Axis Bank's shareholders, including mutual funds and retail investors; its borrowers and depositors; and analysts tracking the health of India's banks.

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