Axis Bank had a rough Friday, and if you’re tracking the markets, you definitely noticed. The stock tanked over 7%, sliding down to ₹1,073.95 on the BSE after the bank reported a 4% dip in its net profit for the April–June quarter. Profits dropped from ₹6,035 crore last year to ₹5,806 crore this time, something investors didn’t take lightly. The result? A heavy sell-off that made Axis Bank the biggest loser across the Nifty 50, Nifty Bank, and Nifty Private Bank charts. Ouch. It was also the stock’s worst day in six months. So, what’s behind the tumble? Worries about rising bad loans, higher provisioning, and shrinking margins. To add to the pain, the stock’s gains for the year shrank to just 4.3%. If you’re wondering what really went wrong behind the scenes, let’s break it down- no jargon, just the facts!
What Went Wrong – Quick View
| Metric | Q1FY26 | Change |
|---|---|---|
| Net Profit | ₹5,806 Cr | -4% YoY |
| Gross Slippages | ₹8,200 Cr | +72% QoQ |
| Net Interest Margin | 3.8% | Down from 4.05% |
| Provisions | ₹3,948 Cr | +94% YoY |
| Credit Cost (Annualised) | 1.38% | Elevated |
What’s Dragging Axis Bank? It’s The Asset Quality
Here’s where things really took a turn- Axis Bank reported gross slippages of ₹8,200 crore in Q1FY26. That’s a 72% jump from the last quarter! What caused the spike? The bank recently went through a one-time “benchmarking” exercise to bring its asset classification rules in line with industry standards. In simple terms, it re-evaluated how it labels certain loans, and that reclassification didn’t go too well. CFO Puneet Sharma said most of these fresh slippages came from unsecured retail loans and overdraft products. Because of this, the bank’s gross NPAs jumped, and the credit cost shot up to 1.38%. That number raised eyebrows. Even after factoring in this one-time change, analysts like Macquarie still think Axis Bank’s credit costs are higher than those of its private peers. Not exactly what investors want to hear.
Axis Banks Margins Under Pressure: Key Takeaways
- Net Interest Margin (NIM) dropped to 3.8% in Q1FY26 from 4.05% in Q1FY25.
- Net Interest Income (NII) stayed flat at ₹13,560 crore, showing no growth year-on-year.
- Analysts say delayed deposit rate cuts after RBI’s earlier rate actions are squeezing margins.
- Systematix expects this margin pressure to continue in Q2FY26.
- Operating profit before provisions rose 14% to ₹11,515 crore, showing strength in core business.
- However, provisions nearly doubled to ₹3,948 crore, up from ₹2,039 crore last year.
- This surge in provisioning offset gains and weighed down overall earnings sentiment.
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Aishwarya is a journalism graduate with over three years of experience thriving in the buzzing corporate media world. She’s got a knack for decoding business news, tracking the twists and turns of the stock market, covering the masala of the entertainment world, and sometimes her stories come with just the right sprinkle of political commentary. She has worked with several organizations, interned at ZEE and gained professional skills at TV9 and News24, And now is learning and writing at NewsX, she’s no stranger to the newsroom hustle. Her storytelling style is fast-paced, creative, and perfectly tailored to connect with both the platform and its audience. Moto: Approaching every story from the reader’s point of view, backing up her insights with solid facts.
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