Axis Bank Q2 Preview: Higher credit costs, margin pressure likely to weigh on earnings

Analysts flag margin pressure and asset quality risks for Axis Bank in Q2

Axis Bank is expected to report a decline in both net interest income and profit for the July–September quarter (Q2FY26), as higher credit costs are likely to squeeze margins. The private sector lender will announce its Q2 results on October 15, 2025.

According to Moneycontrol's poll, Axis Bank is set to see 0.7 percent year-on-year (YoY) decline in net interest income (NII) to Rs 13,377 crore in Q2FY26 from Rs 13,480 crore. Similarly, the lender's net profit is likely to see sharp 14 percent YoY fall to Rs 5,911 crore in Q2FY26 from Rs 6,920 crore.

Estimates of analysts polled by Moneycontrol are shown to be in a narrow range, meaning any positive or negative surprises may elicit a sharp reaction in the stock price. Among the brokerages polled, Anand Rathi rolled out the most bullish projections while Elara Securities forecasted the slowest growth for Axis Bank.

What factors are driving the earnings?

Sluggish loan growth: Analysts at CLSA expect Axis Bank’s loan book to expand 8 percent YoY and 3 percent quarter-on-quarter (QoQ) in Q2FY26. Deposits are projected to rise 2.5 percent QoQ and 9.6 percent YoY, reflecting moderate growth momentum.

Asset quality to deteriorate: According to Motilal Oswal, the bank’s gross non-performing assets (NPA) ratio is expected to rise to 1.7 percent in Q2FY26 from 1.4 percent a year ago. The net NPA ratio is estimated to increase to 0.5 percent from 0.3 percent in the same period.

Margin pressure: Brokerages expect the bank’s margins to contract by up to 38 basis points YoY in Q2FY26 due to the full impact of the RBI’s repo rate cut and higher credit costs weighing on profitability.

What should investors keep an eye on this quarter?

Investors are likely to focus on trends in deposit growth, loan growth, and net interest margins to assess the bank’s overall financial health and outlook for the coming quarters.

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