FY26 AR: Growth led by Corp.; PSL May Affect Profits; Buffers For ECL Switch

Research evidence excerpt

FY26 AR: Growth led by Corp.; PSL May Affect Profits; Buffers For ECL Switch

6, Exhibit 1 - Axis Bank: Key Metrics

with 4QFY26 disbursements rising 28% YoY in housing, 25% in vehicle loans, 34% in retail- KeyNet profitmetrics(Rs mn) 263,735FY25 244,567FY26 288,746FY27E 338,551FY28E 392,393FY29E

(%) 1.7% 1.4% 1.4% 1.5% 1.5%agri, and 22% in personal loans. The improving disbursement trend, coupled with stabilising EPSROAROE(Rs)(%) 85 79 93 109 126 16% 13% 14% 14% 14%

portfolio metrics, reinforces confidence in a gradual increase in the share of retail loans within . P/EP/ABV 2.214 1.815 1.613 1.411 1.29

Source: Company, Jefferies

the overall loan mix.

Share of PSL loans rises, but some risk for FY27. Despite lower PSL-tagging, based on RBI's

directive on agri loans, Axis' overall priority sector loans grew by 15% YoY and were at 44% of

loans. As loan growth has improved this year and PSL tagging has been tightened, we expect

this can lift opex growth next year.

Core asset quality is improving. A positive trend in FY26 was an improvement in core asset

quality, with a ~10% fall in core slippages & lower retail credit costs. However, reported

numbers were weakened by the RBI's mandate to change reporting/provisioning for select

retail loans, provisions against de-tagged PSL, and one-time buffer provisions. Bank's surplus

NPL provisions & buffers can help during ECL-transition.

Improving performance of subsidiaries. Subsidiary performance has improved, led by

stronger growth in Axis Capital and Axis Finance; Axis AMC remained stable, while Axis

Securities lagged. Standalone ROE was 13% vs. Consol at 14%; Consol. profit is 8% higher.

Stays among top-picks. We expect Axis' core asset quality trends to continue improving and

growth trends have improved.