Axis Bank Q2 preview: Net profit to take a hit amid margin pressure & rising costs

Private sector lender Axis Bank is likely to report a fall in both net interest income and profit for the July–September quarter (Q2FY26) as higher credit and operating costs are likely to impact margins. The bank will announce its Q2 results today (October 15, 2025).

The private sector lender, which has been facing margin pressure for over a year, is expected to face the trend in the current quarter. Brokerages noted that the September 2025 quarter is likely to be operationally muted, with weaker profitability and asset quality indicators coming under scrutiny.

Motilal Oswal Financial Services said, "Credit cost is expected to remain high and asset quality could deteriorate marginally this quarter," highlighting ongoing concerns regarding the bank’s risk profile and earnings outlook.

According to YES Securities, net profit is likely to fall 9.5% year on year to Rs 6,257 crore but rise 7.8% on a sequential basis. Net interest income (NII) is seen climbing 2.9% year on year to Rs 13,879.3 crore. Preprovisioning operating profit is likely to come at Rs 10865.2 crore, rising 1.4% on a year on year basis but falling 5.6% against the June 2025 quarter. 

The brokerage expects sequential loan growth to be the 3% ballpark due to idiosyncratic growth trajectory. NII growth will be slower than average loan growth due to fall in yield on advances outpacing cost of deposits. Consequently, NIM will be come sequentially. 

YES Securitie' sequential fee income growth will be higher than loan growth due to seasonality. Operating expenditure growth would be lower than business growth. Slippages are likley to be lower on a sequential basis due to technical slippages in Q1. Provisions will be lower on sequential basis, the brokerage expects. 

Elara Capital forecasted a 21.7% year-on-year fall in recurring profit after tax to Rs 5,417 crore, with EBITDA declining by 10.2% year-on-year, reflecting the impact of cost inflation and modest top-line growth.

ICICI Securities has provided estimates pointing to a 4.1% year-on-year decrease in net interest income to Rs 12,928 crore and a 3.7% fall in pre-provision operating profit to Rs 10,311 crore. Profit before tax is projected to decline by 16.4% year-on-year to Rs 7,111 crore, with net profit expected to drop by 23% to Rs 5,319 crore.

The bank’s net interest margin is forecast to contract to 3.59%, representing a 21 basis points sequential decline and 40 basis points drop compared to the previous year.

While overall slippages are expected to moderate after a spike in Q1FY26, ICICI Securities expects slippages of Rs 5,500 crore, down almost 33% quarter-on-quarter but up 24% from the same period last year, underscoring the ongoing asset quality pressures Axis Bank is navigating in the current environment.