India`s Axis Bank posts bigger-than-expected drop in quarterly profit on higher provisions
Indian private lender Axis Bank reported a bigger-than-expected drop in second-quarter profit on Wednesday, as higher provisions for bad loans weighed on earnings.
The country's fourth-largest private lender by market capitalisation said standalone net profit fell 26% to 50.9 billion rupees ($577.65 million) for the three months ended September.
Analysts had expected a 15% drop in profit to 58.63 billion rupees, according to data compiled by LSEG.
Tepid loan growth and margin contraction have hit overall earnings in the sector, according to analysts, who also expect more loans unsecured loans to turn into bad assets.
While overall asset quality has remained stable for Indian banks, higher defaults in loan segments such as microfinance and personal loans have prompted Indian banks to tighten underwriting norms and ramp up provisions for bad loans.
Banks' unsecured retail loan growth slipped to 11.6% between September 2023 and September 2025, from 27% in the two-year period ending September 2023, according to India Ratings report.
Axis Bank's provisions and contingencies rose 61% year-on-year to 35.47 billion rupees as the lender continued to build buffers.
However, provisions dropped 10% from the June quarter when the bank missed profit estimates after its provisions for bad loans surged due to a one-time industry benchmarking exercise.
Net interest income, the difference between interest earned and interest paid, rose a marginal 2% to 137.45 billion rupees, as per Reuters' calculations.
Axis Bank's gross non-performing asset ratio improved to 1.46% at the end of September from 1.57% three months earlier but has worsened slightly from 1.44% in the year-ago quarter.
The bank's shares ended 0.6% lower ahead of the results.
