Axis Bank GDR declines 5% following disappointing Q1 FY26 results

The UK-listed Global Depository Receipts (GDR) of Axis Bank experienced a 5% drop in value, now trading at $64.2, following the release of its first-quarter earnings report. The results, which were disclosed post-market hours on Thursday, did not meet expectations across various metrics, leading to a sharp decline in the bank's market performance. The GDR has now fallen in three of the last four trading sessions. This trend underscores the market's reaction to the bank's financial health and its ability to meet investor expectations. The decline also reflects broader concerns about the bank's operational resilience in a competitive financial landscape. 

Axis Bank posted a 4% year-on-year drop in standalone net profit for Q1 FY26, coming in at ₹5,806 crore versus ₹6,035 crore in the same period last year. The decline was largely driven by a steep jump in provisions. Net interest income (NII) — the difference between interest earned and interest paid — remained flat at ₹13,560 crore for the quarter. Despite tepid revenue growth, the bank’s operating profit before provisions rose 14% YoY to ₹11,515 crore, compared to ₹10,106 crore in Q1 FY25. Provisions and contingencies nearly doubled to ₹3,948 crore, up from ₹2,039 crore last year, putting pressure on the overall profitability.

Axis Bank Q1 results

Axis Bank's quarterly performance was attributed to 'technical factors,' as stated by the management. The bank's profitability was notably impacted, with asset quality worsening since the March quarter. Provisions saw a significant increase across different timeframes, indicating ongoing financial challenges for the institution. This follows a broader trend of financial instability, as Axis Bank's Indian-listed shares also showed a 0.6% decline on Thursday before the earnings release, and a 4% decrease over the past month. Despite these challenges, the bank remains committed to addressing these issues through strategic financial planning and operational adjustments.

Financial strain 

Puneet Sharma, CFO of Axis Bank, addressed these concerns in an earnings call, assuring investors of minimal impact in future quarters. Sharma mentioned that the bank had reassessed its full book during the first quarter, which contributed to the current financial strain. He stated, "We do not expect to make any further changes to our policy, unless regulations change; we are now the most prudent on the street." This statement reflects the bank's approach to stabilising its financial operations moving forward, emphasising a cautious and calculated strategy. The reassessment aims to align the bank's policies with current market conditions, ensuring long-term sustainability. 

Decline in Axis Bank's GDR

The decline in Axis Bank's GDR comes amidst a challenging environment where slippages in asset quality have increased from the previous quarter. Adjustments for these technical factors have not sufficed, as slippages remain higher both sequentially and from the previous year. The bank's overall performance in 2025 so far shows a modest 8.3% rise, highlighting difficulties faced in maintaining consistent growth in the competitive banking sector. These challenges underscore the need for Axis Bank to innovate and adapt its strategies to maintain its market position. 

Axis Bank is currently navigating these financial hurdles with a focus on strategic adjustments to enhance stability and growth. The bank's ability to adapt and respond to market changes will be crucial in maintaining investor confidence and market standing. As the bank moves forward, its path will require a blend of innovation and prudence to secure a competitive edge in the industry. By leveraging its strengths and addressing its weaknesses, Axis Bank aims to fortify its market presence and ensure sustainable growth.