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Axis Bank net profit down 4% in Q1FY26 on rise in slippages, provisions
'Prudent application of technical parameters for recognising slippages and consequent upgrades impacted reported asset quality parameters, including provisions and contingencies for Q1FY26. Technical impact is largely restricted to cash credit and overdraft products and one-time settled accounts,' the bank said in a statement, adding that 'technical impact' had adversely affected the bank's net profit by Rs 614 crore, return on assets (RoA) by 15 basis points, and return on equity (RoE) by 1.4 per cent.
Additionally, the bank said 80 per cent of individual contracts that slipped because of 'technical impact' and continued to remain non-performing assets (NPAs) as at 30 June 2025 are fully secured.
'Hence, we believe that economic loss due to 'technical impact' will be minimal over the life of such contracts,' the bank clarified.
In Q1FY26, the bank reported fresh slippages of Rs 8,200 crore, up 71 per cent YoY and sequentially. As a result, the bank's loan loss provisions shot up to Rs 3,900 crore, 2.85 times higher sequentially and 1.52 times on a YoY basis. The bank's provisions and contingencies in Q1FY26 stood at Rs 3,948 crore, compared to Rs 1,359 crore in Q4FY25 and Rs 2,039 crore in Q1FY25.
The bank also clarified that Rs 821 crore of provisions and contingencies debited to the profit and loss account was attributable to 'technical impact'. Adjusting for this, the bank's provisions and contingencies would have been Rs 3,127 crore.
Further, the bank said of the Rs 8,200 crore of fresh slippages in Q1, Rs 2,709 crore was attributable to 'technical impact'. Gross slippages for the quarter, adjusted for technical impact, stood at Rs 5,491 crore.
Due to higher slippages, the bank's asset quality took a hit, with gross NPAs at 1.57 per cent at the end of Q1FY26, up 29 basis points over the previous quarter. Net NPAs also rose to 0.45 per cent.
Meanwhile, the private sector lender reported a 1 per cent YoY increase in net interest income (NII) at Rs 13,560 crore, while other income was up 25 per cent YoY at Rs 7,258 crore.
According to the bank, the gross NPA ratio adjusted for 'technical impact' stood at 1.41 per cent, while adjusted net NPA stood at 0.36 per cent.
The bank's net interest margin (NIM) — a measure of profitability for banks — stood at 3.8 per cent, down 17 basis points from the previous quarter and 25 basis points from the corresponding period last year.
Advance growth for the quarter was muted at 8 per cent YoY and 2 per cent sequentially to Rs 10.59 trillion, with retail loans growing 6 per cent YoY to Rs 6.22 trillion; small business banking (SBB) growing 15 per cent YoY; loans against property growing 21 per cent YoY; personal loans rising 5 per cent YoY; credit card advances up 2 per cent YoY; and the rural loan portfolio expanding 5 per cent YoY.
Additionally, the SME book of the bank grew 16 per cent YoY, while the corporate loan book grew 9 per cent YoY. The domestic corporate book grew 11 per cent YoY, and the mid-corporate book grew 24 per cent YoY.
During the same period, the bank's deposit book rose 9 per cent YoY to Rs 11.61 trillion. Current account deposits grew 9 per cent, savings account deposits rose 3 per cent, and term deposits increased 12 per cent YoY. The share of CASA deposits in total deposits stood at 40 per cent at the end of Q1FY26.

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