AXIS Bank Ltd (AXISBANK) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the Axis Bank conference call to discuss the bank's financial results for the quarter ended as on 30th September, 2026. Participation in the conference call is by invitation only. Axis Bank reserves the right to block access to any person to whom an invitation has not been sent. Unauthorized dissemination of the contents or the proceedings of the call is strictly prohibited and prior explicit permission and written approval of Axis Bank is imperative. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions at the end of briefing session. Should you need assistance during the conference call, please signal the operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. On behalf of Axis Bank, I once again welcome all the participants to the conference call. On the call, we have Mr. Amitabh Chaudhry, MD and CEO, and Mr. Rajiv Mantri, Group Head and CFO. I now hand the conference over to Mr. Amitabh Chaudhry, MD and CEO. Thank you, and over to you, sir.
Amitabh Chaudhry (AXIS Bank Ltd): Thank you Sagar. Good evening and welcome to Axis Bank's earnings call to discuss the bank's financial results for the quarter ended September 2026. Before we begin, I would like to warmly welcome Rajiv Mantri to the Axis Bank family. Also, joining us for the call today are our EDs: Subrat Mohanty, Munish Sharda, Neeraj Gambhir, along with other members of the leadership team. The global macro-economic environment continues to face headwinds from geopolitical tensions and trade related disruptions. Renewed tensions in West Asia have continued to disrupt global supply chains and fuel volatility in energy markets, while rising energy and food prices are adding to inflationary pressures across economies. Despite the overhang from elevated commodity prices, tariff related disruptions, and weather related risks, the Indian economy has continued to demonstrate resilience with growth supported by a broad-based economic momentum. Economic activity was underpinned by robust investment activity and healthy private consumption aided by sustained discretionary spending. Supported by proactive regulatory measures, system liquidity improved significantly during the quarter, providing a fillip to credit growth and deposit accretion across the banking system. In an environment characterized by resilient domestic growth and persistent global uncertainties, Axis Bank continued to build a differentiated and agile franchise through investments in digital trust, payments innovation, AI-led capabilities, network expansion, and talent development. We sustained the momentum in our businesses, while delivering sustainable and quality growth, further strengthening balance sheet resilience, enhancing productivity,
Amitabh Chaudhry (AXIS Bank Ltd): Our total advances grew 23% year-on-year and 9% quarter-on-quarter, and excluding the loans extended by our international branches for FCNR(B) deposits, the advances grew 19% year-on-year and 5% quarter-on-quarter. The growth in advances has been supported by continued healthy traction in retail disbursements across segments for the fourth straight quarter, translating into retail book growth of 16% year-on-year and 10% quarter-on-quarter. Even post excluding the leverage facility extended for FCNR(B) deposits, retail book grew 10% year-on-year. Our SME franchise continues to deliver broad-based growth of 25% year-on-year and 9% quarter-on-quarter, driven by differentiated offerings, best-in-class tech and digital capabilities, and a customer-centric approach tailored to the evolving needs of India's MSME ecosystem. Our wholesale banking franchise delivered another strong strong quarter with growth of 34% year-on-year, driven by robust planned activity across sectors, supported by resilient economic momentum. Our relationship-centric approach characterized by greater engagement intensity, disciplined follow-through, and an omnipresent client coverage model, alongside deeper One Axis collaboration continue to strengthen client relationships and franchise performance. Our growth has been through deepening the wallet share across our customers while maintaining our RAROC thresholds. These relationships also provide us access to corporate salary accounts as well as potential for liability relationship and additional fee income going forward. Moving on to the deposits, through our strong NRI franchise and proactive outreach, we garnered a meaningfully better market share of 8% on FCNR(B) deposits in this quarter, raising an aggregate amount of 1018 billion of FCNR(B) deposits. Year-on-year on QAB and MEV basis, MEV basis, our total deposits grew 23% and 21%, term deposits grew 28 and 27, CA grew 15 and 7, SA grew 13 and 12, and total CASA deposits grew 14 and 11% respectively. Quarter-on-quarter on QAB and MEV basis, our total deposits grew 7 and 6, term deposits grew 10 and 8, CA grew 3% and SA grew 2 and 2%, and total CASA deposits grew 3 and 2% respectively. Excluding the portion of FCNR(B) deposits backed by loans given by our international branches, our total deposits grew 17% year-on-year and 3% Q-o-Q, and term deposits grew 21% year-on-year and 3% Q-on-Q on MEV basis, post accounting for the 8.6% Q-o-Q decline in the non-retail term deposits, as we utilized part of the FCNR(B) deposits to optimize our balance sheet. Please refer to Slide 6 for more details on the impact of FCNR(B) on various reporting metrics. Our new-to-bank franchise scaled further with an increasing mix of premium and relationship-led acquisition, resulting in 20% year-on-year growth in NTB average balances and reinforcing the quality of franchise growth. The corporate salary business continued to deliver robust performance, supported by deeper engagement from wholesale coverage team and a sustained focus on relationship deepening. Average NTB salary balances grew by 40% year-on-year, while the existing to bank salary portfolio expanded by 16% year-on-year, reflecting strong customer primacy, improved engagement and continued franchise deepening. Burgundy continues to anchor our premiumization journey, with assets under management up 27% year-on-year and 9% quarter-on-quarter, including AUM for Burgundy Private, which grew 12% year-on-year and 3% quarter-on-quarter. On profitability, our focus has been on building a more sustainable earnings profile, driven by disciplined execution, operating leverage, and improved efficiency. Our net interest income for the quarter grew 12% year-on-year and 5% Q-o-Q. NIM for Q2 FY '27 was 3.36%, including accounting for the impact of FCNR(B) deposits. Excluding the impact of FCNR(B), NIM for Q2 FY '27 stood at 3.47%. Our cost to assets declined further to 2.14%, down 24 basis points year-on-year and 6% 6 basis points Q-o-Q. For the quarter, PAT grew 38% year-on-year, and our consolidated ROA was 1.49% and ROEs were 13.96%. On sustainability, we stay focused on driving quality growth, strengthening balance sheet resilience, building future-ready technology platforms, advancing industry-first innovations, and investing in people and capabilities to deliver sustainable outcomes at scale. Our GNPA was at 1.16%, declining 30 basis points year-on-year and 12 basis points Q-o-Q, NNPA at 0.35%, declining 9 basis points year-on-year and 4 basis points Q-o-Q, while the net credit cost was at 0.45%, down 28 basis points year-on-year and 18 basis points Q-o-Q. For the quarterly progress on our AI transformation journey, please refer to slides 14 and 15 for details. We continue to make progress in our AI journey through Axiom, our enterprise-wide AI operating model focused on embedding AI across customer journeys, operations,
Amitabh Chaudhry (AXIS Bank Ltd): decision making. AI-driven solutions such as Doc AI, Voce AI, and Gen AI powered collections continue to enhance customer experience, improve operational efficiency and delivering better business outcomes. With a strong focus on governance, talent, and innovation, we're accelerating our transition towards becoming an AI-native institution. We continue to strengthen our leadership in digital payments and secure banking through industry-first innovations. During the quarter Axis Bank became the first and only Indian bank to enable Apple Pay for its credit card customers, marking a significant milestone in the evolution of digital payments. Building on our commitment to safe and intuitive banking, we introduced industry-first UPI limit management feature in our mobile banking app, then enables customers to set and manage transaction limits across different UPI payment categories. Beyond technologies and innovation, customer engagement and talent development remain key priorities. We strengthened our customer connect through the launch of Sparsh Week 2026 last month, our flagship customer engagement initiative, while continuing to invest in building a future-ready and customer-centric workforce. Our continued focus on innovation, customer experience, talent development, and execution excellence was recognized through several prestigious industry accolades, including India's Best Digital Bank at the Euromoney Awards for Excellence 2026, honors at the Brand Hall of Awards, ICC Emerging Asia Awards, ABF Retail and Wholesale Banking Awards, and the Sabre South Asia Awards. As we enter second half of the year, we continue to remain watchful and are closely monitoring the evolving external environment. We remain confident in our agility, execution capabilities, and ability to navigate evolving challenges while capitalizing on emerging opportunities. Backed by a strong capital position, a prudent risk culture, and diversified growth drivers, we are well positioned to deliver sustainable and profitable growth while continuing to outperform the industry. With that, I'll now hand over to Rajiv to discuss the financial performance for the quarter.
Rajiv Mantri (AXIS Bank Ltd): Thank you, Amitabh. Good evening, everyone, and thank you for joining us. The salient features of the financial performance of the bank for H1 FY '27 and Q2 FY '27 across operating performance, capital and liquidity position, and asset quality restructuring and provisioning are as follows. For H1 FY '27, we delivered healthy operating performance supported by strong NII growth and operational efficiency. Net interest income was at 30,018 crore, which grew by 10% year-on-year. Fees at 12,536 crore, grew 6% year-on-year. Operating expenses at 20,541 crores, grew 7% year-on-year, delivering a positive jaw on core operating revenue. Core operating profit was at 22,120 crores, grew 11% year-on-year, and profit after tax at 14,117 crore, increased by 30% on a year-on-year basis. Moving to the quarter, the key metrics for Q2 FY 2027 are: net interest income at 15,371 crore, grew 12% year-on-year and 5% quarter-on-quarter. Fee at 6,381 crores, grew 6% year-on-year and 4% quarter-on-quarter. The granular fee was at 90% of the total fees. Expenses at 10,819 crores, grew 9% year-on-year and increased by 11% quarter-on-quarter. Cost to assets stood at 2.14%, improving by 24 basis points year-on-year and 6 basis points sequentially. Operating profit was at 11,083 crores, up by 6% year-on-year. Core operating profit at 10,998 crores, 11% year-on-year. Net credit cost of rupees 1,564 crores at 0.45%, which was lower by 28 basis points year-on-year and lower by 18 basis points quarter-on-quarter. Profit after tax was at 7,003 crores, up by 38% year-on-year perspective. GNPA at 1.16%, declined 30 basis points year-on-year and 12 basis points quarter-on-quarter. NNPA was at 0.35%, declined 9 basis points year-on-year and 4 basis points sequentially. PCR was healthy at 70%. Standard asset coverage of 1.16% improved 3 basis points year-on-year. All provisions by GNPA ratio is 164%, which improved by 17% year-on-year. Annualized consolidated return on assets was at 1.49%. Annualized consolidated return on equity was at 13.96%. Subsidiaries contributed 11 basis points to the consolidated annualized ROA and 66 basis points to the consolidated annualized ROE this quarter. Bank's CET1, including
Rajiv Mantri (AXIS Bank Ltd): The bank has provisions aggregating to Rs 8,006 crores, including the standard asset provisions created in Q2 FY26 pursuant to regulatory guidance. These have not been reckoned for regulatory capital computation, and as a result, they represent an additional buffer over and above the reported capital ratios, translating into an incremental capital cushion of roughly 49 basis points. This reinforces the bank's balance sheet strength and enhances our ability to navigate uncertainty, while continuing to support growth and shareholder value. We reiterate that we do not need equity capital for either the growth or protection pillars. As mentioned during the previous quarter earnings call, we raised AT1 aggregating to US$600 million within first half FY27, which has been used to call back the earlier AT1 as per its contracted call date in September 2026. Additionally, in Q2, we raised US$600 million in senior notes. NIM, moving to net interest income and margins. NIM for Q2 FY2027 was 3.36%, declined by 37 basis points year-on-year and 10 basis points quarter-on-quarter. Excluding the FCNRB impact, the NIM for the quarter was 3.47%, which shows an increase of 1% sequentially 1 basis point sequentially. The quarter-on-quarter NIM decline of 10 basis points can be attributed to 11 basis points due to grossing up for self-leverage FCNR deposits, and also due to the liquidity carry associated with FCNRB deposits, with surplus funds being parked in low-yielding securities prior to deployment in the appropriate avenues. Slightly offset by 1 basis point benefit from lower interest reversals during the quarter. On a year-on-year basis, the NIM decline of 37 basis points can be attributed to 11 basis points due to the FCNR impact as we just explained for quarter-on-quarter, 16 basis points due to the change in balance sheet mix, and 10 basis points due to full impact of the 125 basis points of repo rate cut in the current quarter versus 100 basis points rate cut in the same quarter last year, net of benefit in cost of funds due to liabilities repricing. Cost of funds declined by 8 basis points year-on-year, and increased 3 basis points quarter-on-quarter. Moving to other income and operating expenses. Our fee to asset ratio stood at 1.26%, wholesale fee grew by 10% year-on-year, and total retail fee grew by 4% year-on-year. Trading profit and other income was at 150 crores, declined by 74% quarter-on-quarter, mainly on account of MTM and some realized losses on investments. Operating expenses for the quarter stood at Rs 10,819 crores, growing by 9% year-on-year and 11% sequentially. The year-on-year increase in operating expenses is Rs 862 crores. This increase can be attributed to the following reasons: 48% of the increase is linked to volumes, 23% for investments in technology and digital, and the remaining due to staff costs and other operating expenses. For quarter-on-quarter increase in expenses, it needs to be noted that the bank had Rs 271 crores of one-time reversals in staff costs in the last quarter. Further, there are some one-time expenses of Rs 254 crores in the current quarter, mainly relating to new labor code-related items, and also certain expenses attributable to the FCNRB mobilization. Adjusted for these one-timers, the quarter-on-quarter increase in operating expenses was Rs 572 crores, which is about 6%, attributed to the following reasons. About 60% of this is due to volume, 13% is due to investment in technology and digital, and the remaining are other BAU costs. Overall, technology and digital expenses constituted 10% of total operating expenses for Q2 FY27. We opened net 119 new branches in the quarter, and 139 new branches for the entire half year. Our H1 period end headcount declined by 375 compared to 31st March 2026. Moving to the growth for liabilities and the loan franchise. Amitabh has already discussed the growth in loans and deposits, along with the impact of FCNRB on both. We continue to gain market share on deposits and advances. We gained approximately 10 basis points on market share on the loan franchise, and approximately 10 basis points market share on a year-on-year basis on the deposit franchise. Our loan book is granular and well-balanced, with retail advances constituting 54% of overall advances, corporate loans at 34%, and SME
Rajiv Mantri (AXIS Bank Ltd): percent. Please refer slides 20 and 21 for details around the quality of a liability franchise and slides on our loan franchise. 72% of our loans are floating rate, of which 60% are linked to repo, 12% are linked to MCLR and other benchmarks, 44% of our fixed rate book matures in 12 months. Breakup of the floating rate book by benchmark type and MCLR repricing frequency is set out on slide 10 of our investor presentation. In Q2 FY '27, retail disbursements grew 22% year on year. Disbursement growth in home loans was 24%. Vehicle loans was up 25% and SBB, SBB was up 33% year-on-year. Retail Agri was higher by 19% and consumer loans was up by 20% on a year-on-year basis. Moving to asset quality and provisioning, slippages, GNPA, NNPA and PCR ratios for the bank and segmentally for retail, CBG and corporate are provided on slide 45 of our investor deck. Gross slippages in the quarter were rupees 4,762 crores, of which retail was 4,286 crores, CBG was 287 crores and WBCG was 189 crores. Our gross slippage ratio for the quarter declined 63 basis points year-on-year and 31 basis points quarter-on-quarter. For the quarter, 33% of the gross slippages are attributed to linked accounts or borrowers which was standard when classified or have been upgraded in the same quarter. Net slippages for the quarter were rupees 2,383 crores. Net slippages segmentally were 2,042 crores for retail, 210 crores for CBG and 131 crores in WBCG. Net slippage ratio for the quarter declined 30 basis points year-on-year and 37 basis points sequentially. Recoveries from written-off accounts for the quarter was rupees 971 crores, up by 51% year-on-year. Net slippage in the quarter adjusted for recoveries from written-off pool were 1,412 crores. Segmentally retail was 1,313 crores, CBG was 98 crores and WBCG was rupees 1 crore. As of 30th September 2026, the gross NPA of the bank stood at rupees 16,778 crores, net NPA stood at rupees 5,054 crores and provision for NPA stood at rupees 11,724 crores. The cumulative non-NPA provisions as at September 30, 2026, stands at rupees 15,860 crores, comprising prudent provision for standard assets of 6,775 crores, restructuring provisions of 173 crores, standard asset provision at higher than regulatory rates of 1,914 crores, additional one-time standard asset provision of 1,231 crores, and weak assets and other provisions are rupees 5,767 crores. Moving to the performance of our subsidiaries. The detailed performance of the subsidiary is set out in slide 52 to 59 of the investor deck. In H1 FY '27, the domestic subsidiaries reported a net profit of rupees 1,210 crores, growing 29% year-on-year. The return on investments in domestic subsidiaries was 45%. Axis Finance, the assets under management crossed 54,590 crores, growing 23% year-on-year. Retail plus MSME book constitutes 71% of total loans. H1 FY '27 PAT grew 42% year-on-year to rupees 546 crores, capital adequacy ratio at 22.15% and strong asset quality with net NPA of 0.35%. Moving to Axis AMC. Overall, quarterly average AUM grew 9% year-on-year to rupees 3,82,966 crores. H1 PAT adjusted for the impact of PMS business transfer, was at rupees 370 crores, growing by 36% year-on-year. Axis Capital profit after tax stood at rupees 149 crores, up by 61% year-on-year. And the team executed about 20 ECM and 5 non-ECM deals during the first half. Axis Securities revenues for first half were at rupees 842 crores, and the H1 PAT, adjusted for impact of the PMS business transfer, stood at rupees 191 crores, higher by 9% year-on-year. In summary, we continue to make progress towards building a stronger and more sustainable franchise. We remain vigilant in monitoring the macroeconomic and geopolitical environment, inflation, liquidity and our cost of funds along with their impact on our business. This concludes our opening remarks and we will be happy to take questions.
Moderator: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. [inaudible]
Moderator: operator will announce your name in the question queue. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Chintan with Autonomous. Please go ahead.
Chintan Joshi (Autonomous): Hey, thank you for taking my questions. And and congrats and welcome, Rajiv. Can I start with the retail versus corporate debate? I think a couple of quarters ago we had a fairly robust conversation on the call. And at that stage, the indication was that retail would probably cap out, you know, at at 55%. But it seems like the corporate opportunities continue to remain, and they remain strong because the double A spreads are still quite wide. So is this a trend that we can still expect that, you know, as long as these corporate opportunities are there, the percentage of retail in the loan mix could continue to fall? That was question one. And the second question was on understanding how NIMs might evolve in the next quarter. Firstly, I mean, I should thank you for giving us very clear disclosures on the FCNR adjusted NIMs. Your peers have not done that, so appreciate that that that slide. But just on next quarter, you know, if you could throw light on what kind of movement we should expect there, that would be helpful. Thank you.
Rajiv Mantri (AXIS Bank Ltd): So I think on on the question on the corporate opportunity, I'll request Vijay to talk about that and then I'll take the question on the NIM outlook.
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