Axis Bank Q1 preview: Profit, NII to stay healthy; NIM likely to shrink due to deposit repricing, competitive funding

Axis Bank Q1 preview: Private sector lender Axis Bank is set to announce its financial results for the April-June quarter of the financial year 2026-27 (FY27) on Saturday, 18 July.

Most experts expect the bank's Q1 numbers to be healthy, due to strong loan and deposit growth. Net interest margin (NIM), however, may decline, mostly because of seasonally higher slippages during the first quarter of the financial year, deposit repricing, and competitive funding costs.

The Q1FY27 business updates of Axis Bank, released in the first week of July, showed that Axis Bank’s gross advances rose by 18.8% year-on-year (YoY) to ₹12.73 lakh crore. On a sequential or quarter-on-quarter (QoQ) basis, gross advances grew 2.3%.

Total deposits increased by 18.2% YoY and 2.8% QoQ to ₹13.73 lakh crore in Q1FY27.

The current account and savings account, or CASA deposits, grew 11.4% YoY to ₹5.22 lakh crore, but declined 1.4% sequentially. Term deposits grew by 22.8% YoY and 5.5% QoQ to ₹8.51 lakh crore.

According to brokerage firm Motilal Oswal Financial Services, Axis Bank's NIM may decline by 5 basis points QoQ amid faster growth in corporate and due to seasonally higher slippages in Q1, even as net interest income (NII) may see a healthy 10.6% YoY rise.

Net profit may rise by 15% YoY, but operating profit is likely to shrink by 1.7% YoY, Motilal Oswal said.

Kotak Institutional Equities expects a 16.8% YoY rise but 4.1% QoQ fall in Axis Bank's profit. The brokerage firm expects a 9.2% YoY and 2.4% QoQ rise in NII, while NIM may decline by 28 bps YoY and 8 bps QoQ.

"We expect slippages of nearly ₹4700 crore (nearly 1.5% of loans), mostly led by retail and LLP of nearly 50 bps. Commentary on asset quality outlook is likely to be positive. Loan growth outlook, FCNR deposits, NIM progression, and RoE normalisation to peers may be the key discussion areas," said Kotak.

Saurabh Jain, Head of Fundamental Research at SMC Global Securities, said Axis Bank's results are expected to remain healthy, supported by robust loan growth, healthy deposit mobilisation and sustained momentum across retail, SME and corporate lending.

Jain said net interest income (NII) is expected to register steady year-on-year growth, although net interest margin (NIM) is likely to remain broadly stable to marginally lower due to deposit repricing and competitive funding costs.

Profitability is expected to improve, supported by healthy operating income, strong fee income, controlled credit costs and resilient asset quality, partly offset by margin pressure and higher operating expenses, said Jain.

As per Jain, key things to watch include loan and deposit growth, NIM trajectory, CASA ratio, asset quality (GNPA, NNPA and slippages), credit cost, provisioning trends, fee income growth, management commentary on margin outlook, dividend announcement, deposit mobilisation strategy, retail and SME credit demand, unsecured loan performance, capital adequacy, and FY27 business growth guidance.

Ishank Gupta, BFSI Research Analyst at Choice Institutional Equities, pointed out that the FactSet Consensus signals Axis Bank's NII may increase by 8.9% YoY and 2.2% QoQ to ₹14,770 crore, whereas the bank's total income is likely to grow by 4% YoY and 5.7% QoQ to ₹21,650 crore.

The bank's net profit, as per Gupta, is seen as expanding by 18.6% YoY but may drop 2.6% QoQ to ₹6,880 crore, majorly driven by lower provisioning.