According to the report, the bank's management now expects net interest margins to bottom out in the fourth quarter or early in the first quarter, later than the earlier guidance of a third-quarter trough.
Management expects a shallow, C-shaped recovery in margins. Net interest margins are seen moving towards 3.8% over the next 15 to 18 months.
The report said optimisation of the fee-to-assets ratio remains constrained in the near term due to the current business mix and market conditions.
The brokerage reiterated a Neutral stance on the stock and maintained a target price of Rs 1,285.
On asset quality, management said stress in the credit card portfolio is easing. The personal loan book has largely stabilised. No fresh stress is visible in export-oriented MSMEs.
Technical gross slippages may see a seasonal uptick in the third quarter, led by agricultural cash credit and overdraft facilities. Management said the impact is expected to be milder than in the previous stress cycle.
Management also pointed to improving momentum in the corporate segment. Working capital utilisation and refinancing activity are picking up. The retail business is showing early signs of recovery, though sustainability remains under watch.
Axis Bank is the third-largest private sector bank in India. As of 30th September 2025, the bank's distribution network comprised 5,976 domestic branches and 13,177 ATMs.
The bank reported a 26.42% decline in standalone net profit to Rs 5,089.64 crore in Q2 FY26 compared with Rs 6,917.57 crore in Q2 FY25. Total income increased 1.22% YoY to Rs 37,594.81 crore in Q2 FY26. The bank's net interest income (NII) stood at Rs 13,745 crore in Q2 FY26, up 1% QoQ and 2% YoY basis. Net Interest Margin (NIM) for Q2 FY26 stood at 3.73%.
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