Axis Bank posts biggest single day fall in 3 months after Q2 earnings; Here is why

Shares of Axis Bank, the country's leading private sector lender, dropped as much as 5%, its biggest single day fall since December 16, 2025, to an intraday low of ₹1,225 on the National Stock Exchange (NSE) on Monday, October 19, despite reporting strong set of earnings in the second quarter of current financial year.

Global investment bank Goldman Sachs said that QFY27 earnings were largely in-line with expectations and thesis of cyclical inflection in core pre-provisioning operating profit (PPoP) growth remains on track.

"This is being led by improving visibility on NIMs, with retail disbursements remaining strong, the CASA growth run-rate has picked up and the rate cycle is turning," Goldman Sachs said.

Key challenge is around fee income, where growth remains muted, but we expect continued cost optimization to partly offset that, Goldman Sachs added.

Another investment firm Bernstein noted that Axis Bank delivered a mixed second quarter performance, with lower credit costs driving earnings growth despite weaker core trends.

Loan growth remained robust and corporate-led, although strong borrowings growth pushed loan-to-deposit ratio (LDR) sharply higher to 95%.

Citi said that elevated operational expenditure from one-off labour code provisioning and FCNR charges, alongside muted mid-single-digit fee growth masked robust core operational resilience.

While headline net interest margin (NIM) contracted by 10 basis points (bps) quarter-on-quarter (QoQ) to 3.36% due to optical FCNR(B) distortions, core margins held firm at 3.47%, further supported by structural tailwinds including a 60% repo-linked book, bulk deposit roll-offs, and liquidity redeployment.

Axis Bank Q2 earnings

Axis Bank on Saturday reported a net profit of ₹7,003 crore in July-September period, marking an increase of 38% from ₹5,090 crore in the same period last year. On a sequential basis, however, its net profit declined 1.56% from ₹7,114 crore.

The bank's net interest income (NII) increased 12% annually to ₹15,371 crore at the end of September quarter from ₹13,745 crore a year earlier.

Axis Bank's asset quality showed an improvement during the quarter as its gross non-performing assets (NPA), as a percentage of total advances, came in at 1.16% as against 1.46%, a year earlier.

Its net NPA stood at 0.35%.

In absolute terms, gross NPAs were ₹16,777.52 crore compared with ₹17,307.74 crore in the year-ago period.

“As customer expectations continue to evolve, our focus remains on building a franchise that combines innovation, trust and execution at scale. This quarter, we built on our leadership in digital payments and secure banking while advancing our technology agenda through AI-driven innovation and strategic partnerships," said Amitabh Chaudhry, MD & CEO, Axis Bank.

"We expanded our reach, enhanced customer propositions, invested in talent, and deepened our contribution to communities. Together, these efforts reflect our commitment to creating long-term value for our customers, stakeholders and the broader economy,” he added.

As of 10:32 am, Axis Bank shares traded 3.8% lower at ₹1,241, underperforming the NIFTY50 index which was down 0.4%. The stock was top loser in the NIFTY50 index.