Axis Bank Q2FY26 Financial Results Preview: Analysts Highlight Key Metrics and Challenges

Axis Bank is set to release its Q2FY26 financial results on October 15, 2025. The bank's performance is expected to show steady progress with minor improvements in key areas. Analysts from Prabhudas Lilladher and InCred Equities have provided previews of the anticipated results, highlighting both positive trends and challenges faced by the bank.

Prabhudas Lilladher anticipates Axis Bank's Net Interest Income (NII) to reach Rs 13,634.7 crore, marking a slight increase of 0.6% quarter-on-quarter (QoQ) and 1.1% year-on-year (YoY). However, due to margin compression, Pre-Provision Operating Profit (PPOP) is expected to decline by 1.2% YoY and 8.1% QoQ to Rs 10,579.3 crore.

InCred Equities projects a different picture for Axis Bank's Q2FY26 results. They estimate the NII at Rs 13,200 crore, reflecting a decrease of 2.3% YoY and 2.8% QoQ. This decline is attributed to pressure on interest income. PPOP may also drop by 7.1% YoY and 13.6% QoQ to Rs 9,900 crore due to lower margins and higher operating expenses.

Despite these challenges, Prabhudas Lilladher expects the bank's Profit After Tax (PAT) to rise by 10.8% QoQ to Rs 6,434.5 crore, although it may see a YoY decline of 7%. This improvement is largely due to reduced provisioning costs, which are predicted to fall significantly by 49.3% QoQ and 9% YoY to Rs 2,000 crore.

The bank's loan book is projected to grow steadily, with total loans reaching Rs 11 lakh crore, indicating a robust credit growth of 3.8% QoQ and 10% YoY according to Prabhudas Lilladher. InCred Equities also notes advances of Rs 10,80,000 crore, showing an increase of 1.9% QoQ and 8% YoY.

Asset quality management appears strong as credit costs improve significantly. InCred Equities highlights a notable improvement in credit costs to 73 basis points (bps), an enhancement of 78 bps QoQ and a reduction of 16 bps YoY.

Challenges in Margins and Profitability

Both analysts point out challenges in margins affecting profitability. Prabhudas Lilladher notes that the Gross Non-Performing Asset (NPA) ratio might slightly rise to 1.56% from last year's 1.44%. The Net Interest Margin (NIM) is expected to decrease by nine bps QoQ to 3.62%. InCred Equities also reports a drop in NIM to 3.65%, down by 34 bps YoY and 15 bps QoQ due to ongoing yield pressures.

"Axis Bank trades at a steep discount to ICICI Bank's core price-to-book valuation," said InCred Equities in a note. "We expect the discount to materially narrow over the medium term as systemic growth recovers and credit cost normalization aids profitability."

The upcoming results will reflect Axis Bank's ability to navigate margin constraints while maintaining strong loan growth and improved asset quality management.