Axis Bank Q2 Results Preview: Profit Likely To Decline 16% On Rising Provisions; Margin Expected To Contract

Axis Bank will be the first major lender to report September-quarter results on Oct. 15, marking the start of the banking earnings season. The lender is expected to post a 15.6% year-on-year drop in net profit to Rs 5,838 crore as margins contract and provisions increase, according to Bloomberg estimates.

Profitability may stay under pressure as Net Interest Margins (NIMs) moderate to 3.6% from 3.8% in the June quarter. Analysts said credit costs are likely to remain elevated even as slippages ease. Meanwhile the loan growth is expected to rise 9% on a yealy basis, according to Kotak Securities. Asset Quality is set to weaken as gross NPAs are expected to rise slightly to 1.62% from 1.57% in the previous quarter, while provisions are projected to increase 14% year-on-year to Rs 2,516 crore.

Analysts expect the bank’s earnings to reflect the broader sector trend of margin compression following recent repo rate cuts and a slowdown in trading gains. Profitability across banks is expected to remain subdued in the near term before stabilising from the December quarter as funding costs settle and credit growth improves.

• Profit seen 15.6% lower at Rs 5,838 crore versus Rs 6,917.57 crore

• Net interest income seen 1.9% lower at Rs 13,228.81 crore versus Rs 13,483.20 crore

• Provisions seen 14.4% higher at Rs 2515.63 crore versus Rs 2,204.09 crore

• Gross NPA seen at 1.62% versus 1.57% (QoQ)

• NIM seen at 3.60% versus 3.8% (QoQ)

Here’s what analysts are expecting from Axis Bank’s Q2 results:

• NIMs likely to decline by around 25 basis points sequentially, but remain higher than peers due to timing differences in loan repricing.

• Credit cost to moderate but stay elevated at about 1.1%.

• Loan and deposit growth expected to pick up.

• Key monitorables: asset quality, margins, and loan/deposit growth outlook.

• Impact of the 75-basis-point rate cut expected to show up mainly in Q2, given Axis Bank’s repo reset timing.

• NIMs likely to bottom out in Q3.

• Slippages seen moderating sequentially, with improving credit card and personal loan trends.

• Net slippages expected to improve through FY25; credit cost forecast at 1.1%; return on assets likely soft at 1.2–1.3%.

• Slower growth, margin contraction, and elevated credit cost to limit earnings.

• Slippages may fall quarter-on-quarter but stay high due to stress in unsecured retail loans.

• Business growth likely to trail system levels.

• NIMs seen down about 15 basis points sequentially, with a marginal uptick in core slippages.

• Watch for trends in business growth, NIM trajectory, and follow-up slippages under new NPA tagging norms.

• Loan growth estimated at 9% year-on-year and 3% sequentially.

• NIMs expected to fall about 10 basis points to 3.5% due to the rate cut cycle.

• Fee income growth likely to stay weak; slippages pegged at Rs 6,000 crore (about 2.2% of loans).

• Key focus: unsecured segment stress, technical slippages, and margin trajectory.