Axis Bank Remains Cautious Amid Tariff Uncertainty, Reports Flat March Quarter Profit

Axis Bank remains confident that the ongoing tariff war between the US and other nations will not significantly impact corporate loan demand, according to Deputy Managing Director Rajiv Anand. In a post-earnings media call on Thursday, Anand stated that the bank had conducted a thorough review of its loan portfolio, which did not indicate any major issues due to tariffs at this time.

"On tariffs, we have done a fairly elaborate exercise, bottom-up, looking at our portfolio. At this point in time, we don't see any material issues with the portfolio," Anand explained. "I don't think tariffs are impacting demand for money at this point in time. Corporates continue to be cautious as far as private capex is concerned. But more importantly, there is ample cash on corporate balance sheets at this point in time. So, therefore, we do expect that corporate demand going forward will be relatively muted," he added. As of March 31, Axis Bank’s corporate loans were up 8% on year at ₹2.99 trillion.

For the January-March quarter, Axis Bank reported a net profit of ₹71.18 billion, down 0.2% from the same period last year but ahead of analysts' expectations of ₹67.13 billion. The bank's shares closed unchanged at ₹1,207.10 on the National Stock Exchange on Thursday.

Axis Bank’s Managing Director and CEO, Amitabh Chaudhry, said the bank had focused on profitability over growth during 2024-25 due to the uncertain macroeconomic environment and tight liquidity conditions. "As we enter 2025-26, we believe the operating environment is improving, which should help us drive both growth and profitability," Chaudhry noted.

In terms of loan growth, Axis Bank's retail loans rose 7% to ₹6.23 trillion. The bank has been cautious in growing its retail book due to concerns over asset quality. The bank reported fresh slippages of ₹48.05 billion for the quarter, up from ₹34.71 billion a year earlier but lower than the ₹54.32 billion reported in the previous quarter.

Arjun Chowdhry, Axis Bank’s Group Executive for affluent banking, NRI, cards/payments, and retail lending, mentioned that the bank was seeing early signs of improvement in its retail book, particularly in its unsecured loan portfolio. "As we see early signs of improvement on that (retail book), we will be opening up the acquisitions on those segments as well," Chowdhry said.

The bank also reported stabilisation in its card portfolio, although improvements in personal loans are expected to take a few more quarters. With stricter criteria for loan upgrades, Axis Bank expects a negative impact on credit costs, upgrades, and recoveries in 2025-26 compared to 2024-25. Slippages are expected to be higher in the April-June quarter due to seasonality before easing.

Axis Bank's cost of deposits has started to trend downward, following its recent decision to lower interest rates on savings accounts.

On the Reserve Bank of India’s final guidelines for the Liquidity Coverage Ratio (LCR) that will take effect from 2026-27, Chief Financial Officer Puneet Sharma said the impact on Axis Bank's balance sheet is "neutral" on a static basis but would depend on the evolving balance sheet. "It would be more prudent for us to comment on this closer to the implementation date," Sharma added.

In the January-March quarter, the bank’s average liquidity coverage ratio was 118%. Earlier this week, the RBI provided some relief to banks by reducing the additional run-off factor on retail deposits enabled with internet and mobile banking to 2.5%, down from 5% proposed in the draft norms last year. The RBI also noted that the new norms would improve the aggregate LCR of banks by around 6 percentage points as of December.