Axis Bank declared its quarterly results after the close of Thursday trade and on Friday, the share declined nearly 3.5 % to Rs 1,165, on a day when investors were very cautious, given the war-like between India and Pakistan. The Axis Bank stock had hit a 52-week high of Rs 1,339.6 on 12 July 2024.
Performance in the March 2025 quarter
For a key performance metric, net interest margin (NIM), for Axis Bank, its domestic Net Interest Margin (NIM) was 4.08% in the fourth quarter of FY 25 vis-à-vis 4.16 % a year earlier. HDFC Bank, the largest private sector bank, its core net interest margin was 3.65% on interest earning assets in the fourth quarter of FY 25 vis-à-vis 3.63 % a year earlier. And in the case of ICICI Bank, second largest private sector bank, its NIM was 4.41 % in the March 2025 quarter vis-à-vis 4.4 % a year earlier.
Meanwhile, Axis Bank grew its advances in the March 2025 quarter by nearly 7.8 % y-o-y to Rs 10.4 lakh crore helped by strong demand for credit from SME and mid-corporates. Bigger rival HDFC Bank’s gross advances grew 5.4 % y-o-y to Rs 26.4 lakh crore in the fourth quarter of FY 25 while ICICI Bank’s total advances grew at 13.3 % y-o-y in the March 2025 quarter to Rs 13.41 lakh crore.
Asset quality of these leading private sector banks has been more or less stable in the March 2025 quarter — Axis Bank’s % of net NPAs was 0.33 % in the fourth quarter of FY 25 vis-à-vis 0.31% a year earlier. HDFC Bank’s percentage of net NPAs to net advances was 0.43 % in the fourth quarter of FY25 vis-à-vis 0.33 % a year earlier.
However, Axis Bank’s other operating expenses grew 7.5 % y-o-y to Rs 6,876 crore in the March 2025 quarter and it resulted in the bank’s standalone net profit at Rs 7,117.5 crore in the quarter under review, broadly flat on a y-o-y basis. ICICI Bank grew its standalone net profit nearly 18 % y-o-y to Rs 12,629.6 crore in the March 2025 quarter.
ICICI Bank also had a superior return on assets (annualized) of 2.52 % for the March 2025 quarter while for HDFC Bank it was 1.94% in the quarter under review and for Axis Bank it was 1.83%.
Given the numbers, its clear that Axis Bank is still trailing its larger peers, especially ICICI Bank.
Outlook going forward
The RBI had cut repo rates by 25 basis points to 6 % in its monetary policy review earlier this month. Apart from RBI, global central banks like the ECB had also recently cut rates at a time when growth risks for the global economy have increased considerably with the tariff war that has been waged by the Trump administration over the past few weeks.
The RBI has also projected real GDP growth at 6.5 per cent for 2025–26 for the economy and that is broadly in tune with the previous financial year. To protect NIMs, several private sector banks have recently cut interest rates on savings rates. In addition, higher cost fixed deposit schemes are also being curtailed.
Axis Bank has more than 5,870 branches at the end of FY25 and they will play a key role in attracting low-cost deposits as well as growing the loan portfolio, going forward. Investors will also be closely monitoring if the current global trade war leads to a rise in bank NPA ratios here.
Investors on Dalal Street
Axis Bank trades at a P/E of nearly 12.5 times estimated standalone earnings for FY 26. HDFC Bank trades with a P/E of nearly 21 times estimated standalone earnings for FY 26 while ICICI Bank trades at 19 times estimated standalone FY 26 earnings.
Axis Bank trades at valuation lower than its bigger rivals. Nevertheless, investors could wait for a correction in these bank stocks before making an investment for the long-term.
Disclaimer:
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his dependents do hold the stocks discussed in this article.
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