Axis Bank announced its financial results for the first quarter of FY26, reporting a 4% year-on-year (YoY) decline in standalone net profit, which fell to ₹5,806 crore from ₹6,035 crore in the same quarter last year. The results, announced on Thursday, July 17, 2025, revealed a marginal increase in net interest income (NII), alongside a significant rise in provisions.

The bank's net interest income (NII), a key indicator of core lending operations, saw a marginal increase of 1%, reaching ₹13,559.75 crore compared to ₹13,448.23 crore in the corresponding quarter of the previous year. Some analysts had anticipated a slightly better NII performance, with Nuvama projecting a 2.7% YoY growth. However, YES Securities suggested that NII growth would be slower than average loan growth due to a fall in yield on advances outpacing the cost of deposits.

Despite the muted growth in NII, Axis Bank's operating profit (before provisions and contingencies) increased by 14% YoY, climbing to ₹11,515 crore from ₹10,106 crore in Q1 FY25. Total operating revenue also saw an 8% increase, rising to ₹20,818 crore. Core operating revenue, excluding trading and exchange gains, increased by 3% to ₹19,398 crore. The increase in operating profit was offset by a sharp rise in provisions and contingencies, which nearly doubled to ₹3,948 crore in Q1 FY26 from ₹2,039 crore in the same quarter last year. This substantial increase in provisions was a major factor contributing to the decline in net profit.

The bank's asset quality showed some signs of stress. Gross Non-Performing Assets (NPAs) rose to ₹17,765 crore from ₹14,490 crore in the previous quarter. The gross NPA ratio increased to 1.57% from 1.28% quarter-on-quarter (QoQ). Similarly, net NPA increased to ₹5,066 crore from ₹3,685 crore QoQ, with the net NPA ratio rising to 0.45% from 0.33%.

Several key subsidiaries of Axis Bank continued to perform steadily. The total profit from domestic subsidiaries in Q1FY26 was ₹451 crores, a 4% increase YoY, yielding a return on investment of 47%. Axis Finance saw its PAT grow by 23% YoY to ₹189 crores, with stable asset quality metrics and an ROE of 13.98%. Axis AMC's PAT grew by 12% YoY to ₹130 crores. Axis Securities' customer base grew 15% YoY, with a Q1FY26 PAT of ₹89 crores. Axis Capital recorded a PAT of ₹38 crores and executed ECM deals during the quarter.

Other key financial highlights from Axis Bank's Q1 results include: Operating revenue up 8% YOY, Operating expenses up 2% YOY and down 5% QOQ, Net Interest Margin (NIM) at 3.80%, Non-interest income up 25% YOY, Fee income up 10%, Retail fee up 9%, granular fees at 91% of total fees, Cost to assets at 2.41% declined 13 bps YOY and 5 bps QOQ, SME loans up 16% YOY and 2% QOQ, Corporate loans up 9% YOY and 6% QOQ, Mid-Corporate (MC) up 24% YOY, Overall CAR stood at 16.85% with CET-1 ratio at 14.68%.

In conclusion, Axis Bank's Q1 FY26 results reflect a mixed performance. While the bank demonstrated growth in operating profit and revenue, a significant increase in provisions led to a decline in net profit. The marginal rise in NII and concerns over asset quality, as indicated by the rise in NPAs, also contributed to the subdued results.